BANK DEPARTMENT SERIES— I. 



The Paying Teller's 
Department 

Bv GLENN G. MUNN 



The Bankers Publishing Co., New York 




Class \\ (j-l( zl (& 
Book ,/7T 



00EXRIGHT DEPOSm 



BANK DEPARTMENT SERIES— I. 



The Paying Teller's 
Department 



BY 



GLENN G. MUNN 




New York 

The Bankers Publishing Company 

1922 






Copyright 1922 
The Bankers Publishing Company 



\- 


8>CU659103 


PRINTED LN U. S. A 

MAR 1 1 192? 



<wo 



CONTENTS 

Page 

Preface 9 

The Relative Use of Money and Credit. 14 

Qualifications of a Good Paying Teller 15 

The Paying Teller's Duties 18 

Organization Chart of Paying Functions . . . 22, 23 

Cash Reserves and Cash Requirements 24 

The Paying Tellers' Cages 28 

The Unit Paying-Receiving System 30 

Methods of Safeguarding Paying Teller's 

Cash 33 

Cashing Checks 39 

The Paying Teller's Cash Proof 53 

Form of Paying Teller's Cash Proof 54, 55 

Risks of the Paying Teller 57 

Stop-Payments 58 

Alterations and Forgeries 63 

Certifications 65 

Sources of Money Supply 69 



CONTENTS 

Page 

The Money Department 72 

What a Paying Teller and Money Counter 
Should Know About the Various Kinds 
of Money 76 

Chart Showing Various Kinds of United 
States Money With Their Leading Char- 
acteristics 91 

Separating Good or Usable Money from Muti- 
lated and Worn 92 

Separating Paper Money by Denominations . . 96 

Detecting Counterfeit Currency and Raised 

Bills 98 

Verifying the Count 104 

Money Section Proof 106 

Shipping Currency 108 

Settling Clearing House Balances 115 

The Bank's Payroll 116 

The Petty Cashier 121 

The Paying Teller's Reports 122 

Department Proof to General Bookkeeper. . . 124 



APPENDICES 

Page 

I. — Digest of Court Decisions Showing 
Liability of Bank to Drawer for 
Certain Irregularities in Certified,, 
AlterecL, Forged^ Post-Dated and 
Stopped Checks . . 127 

II. — Purposes of and Principles Underlying 

Subsidiary or Fractional Coins 135 

III. — Charts Showing Engraved Portraits on 
Various Kinds of United States 
Paper Money 137 



THE PAYING TELLER'S 
DEPARTMENT 



PREFACE 

l^TOT every bank requires in its organ- 
•^^ ization the more recently added de- 
partments, such as Xew Business, Credit, 
Trust, Investment, Safe Deposit, For- 
eign Exchange, etc., but no bank can 
dispense with the paying teller and his 
related functions. The duties of the pay- 
ing teller entail responsibility of a high 
order and his acts are surrounded by a 
variety of business customs, laws and 
legal decisions, the observance of which 
act as a safeguard against loss. The non- 
observance of these practices and customs 
are almost certain to result in losses to 
the bank. 

The functions of the paying teller are 
sufficiently important, complicated and 
dignified, and carry sufficient responsi- 
bility to be deserving of a comprehensive 

[9] 



THE PAYING TELLER'S DEPARTMENT 

and authoritative . treatment. Although 
some attention has been given to the pay- 
ing teller's department by several books 
dealing with practical banking subjects, 
never before has a volume exclusively 
devoted to the paying teller's depart- 
ment, appeared. The books referred to 
have not attempted to place at the dis- 
posal of the paying teller, certification, 
check, money and shipping clerks a com- 
plete compendium of the information 
over which they should have absolute 
mastery. 

The purpose of this volume is to pre- 
sent in a practical manner the functions 
of the paying teller and related depart- 
ments in every phase — whether they 
occur in a city or country bank, or in the 
East or West. It is intended as a ref- 
erence book to which the officers, paying 
tellers and other clerks may turn for 
guidance in answering questions which 
constantly arise with regard to cashing 

[10] 



THE PAYING TELLER'S DEPARTMENT 

checks, certifications, reserve require- 
ments, supply and disposition of money, 
tests for counterfeit money and raised 
bills, shipping currency, etc. 

This volume is an outgrowth of actual 
contact and experience, both with the 
operations of the paying teller and re- 
lated departments, and in presenting this 
material and problems involved, to classes 
in banking. Acknowledgment is made 
to Mr. Russell N*. Thatcher, Paying 
Teller of the Chase National Bank, New 
York City, for his assistance in the prep- 
aration and reading of the manuscript. 
Glenn G. Munn. 

New York, January 10, 1922. 



[ii] 



THE PAYIXG TELLERS 
DEPARTMENT 

T^HE present age is often styled the 
age of credit because the use of credit 
instruments has to a large extent sup- 
planted the use of money in settling busi- 
ness transactions. It is estimated that 
about 60 per cent, of the transactions in 
the retail trade, and about 95 per cent, 
of the transactions in the wholesale trade, 
and in the aggregate about 90 per cent, 
of all transactions, are settled by means 
of credit instruments — checks, trade ac- 
ceptances, drafts and notes — so that 
money is needed to settle approximately 
only 10 per cent, of the total. The ex- 
tent of use of credit instruments depends 
upon banking facilities offered to a com- 
munity, its business habits (money set- 
tlements are more common in the rural 

[13] 



THE PAYING TELLER'S DEPARTMENT 

than in the urban districts), and its gen- 
eral intelligence. 

The Relative Use of Money and Credit 
To illustrate the extent of use of credit 
instruments in the settling of transac- 
tions, the volume of bank clearings may 
be compared with their total cash hold- 
ings. The situation in New York is 
taken as indicative of the situation for 
the entire country. Records show that 
for the week ending April 29, 1921, ap- 
proximately $3,500,000,000 were cleared 
through the New York Clearing House 
Association, and that these same banks — 
71 in number — held on an average dur- 
ing the same week approximately $100,- 
000,000 in cash. In other words, the 
cash held by the banks members of the 
Clearing House Association was only 
one-thirty-fifth of the dollar amount of 
transactions settled through the Clearing 
House. It is probable, moreover, that 

[14] 



THE PAYING TELLER'S DEPARTMENT 

only a small part of the cash was "turned 
over". 

These figures demonstrate the magni- 
tude of the use of credit instruments as 
a substitute for money settlements. But 
despite the tendency in the direction of 
settlements by'" means of checks, money 
cannot be entirely dispensed with. Money 
is still an important medium of ex- 
change. We have not yet approached 
that stage of refinement which enables 
us to entirely abolish cash payments. 

It is noteworthy, however, that the 
tendency to expansion in the use of credit 
instruments has been reflected in the rel- 
atively larger growth of the mail, clear- 
ing house, transit and collection depart- 
ments of a bank when compared to the 
paying teller's department. 

Qualifications of a Good Paying Teller 

Foremost among the qualifi cations of 
a good paying teller is that of high mora] 

[15] 



THE PAYING TELLER'S DEPARTMENT 

character. On account of the current 
nature of the funds with which he deals, 
and the prohibitive cost of indemnifying 
the bank against possible defalcations of 
the funds he controls, a person must be 
selected who is absolutely trustworthy. 
Convincing moral integrity is at all times 
paramount. 

Perhaps next in importance is the 
trait of self-possession and composure. 
Numerous risks are involved in paying 
out money against checks, and there are 
no less than seven or eight features of a 
check which must be scrutinized before 
the paying teller can satisfy himself that 
its payment will involve no loss. In view 
of the fact that the paying teller must 
often work under severe pressure with a 
long line standing in front of his window, 
ability to pay out cash without becoming 
flustered or losing poise and equilibrium, 
and without making ruinous errors is a 

[16] 



THE PAYING TELLERS DEPARTMENT 

quality which can be developed only by 
patience and training. 

Perhaps no teller is in a position to ad- 
vertise the bank's service qualities as well 
as the paying teller. He probably meets 
more of the bank's customers than any 
other person, and for this reason he occu- 
pies a strategic position. He should 
have a memory for faces, be able to call 
the bank's customers by name, and main- 
tain a friendly and courteous attitude 
even though he may be working under 
pressure or other trying circumstances. 
The nature of his work is such, more- 
over, that he must combine the contra- 
dictory attributes of accuracy and speed. 

A paying teller must be competently 
trained. Usually he has been upgraded 
from less responsible positions and has 
graduated from the money, bookkeepers' 
and receiving teller's departments. He 
should know in a general way the status 
of the various customers' accounts and 

[17] 



THE PAYING TELLER'S DEPARTMENT 

be acquainted with the signatures of the 
principals of such accounts. Since the 
signature on a check is in the last analy- 
sis the one distinctive feature, without 
which it is worthless, he must be some- 
thing of a handwriting expert, compe- 
tent at least to judge between genuine 
and forged signatures. His ability to 
detect counterfeits and raised bills is also 
a necessary pre-requisite. This knowl- 
edge will probably have been gained by 
previous service as a money counter. 

The^ Paying Teller's Duties 

The paying teller, also known as the 
first teller, is visually exclusive custodian 
of that part of the money stock of a bank 
necessary for current counter use. This 
stock of money is ordinarily called till 
money. In banks, members of the Fed- 
eral Reserve System, the paying teller is 
not directly concerned with the mainte- 
nance of the legal cash reserve, but 

[18] 



THE PAYING TELLER'S DEPARTMENT 

among state banks where the legal re- 
serve is maintained in the bank's own 
vault (or with a depositary), he is re- 
sponsible for seeing that the legal re- 
quirements are fulfilled. 

Aside from the paying teller's respon- 
sibility in maintaining the proper legal 
cash reserve where that is necessary, he 
is always custodian of the money stock 
intrusted to him. He provides a suffi- 
cient supply of various denominations 
and kinds of money to meet the demands 
of ordinary business, and has control of 
certain compartments of the vault. In 
addition to custodianship of the bank's 
till money, the paying teller is intrusted 
with certain disbursing functions — prin- 
cipally the cashing of checks. This car- 
ries with it numerous auxiliary duties, 
such as making cash disbursements for 
payroll purposes, petty and other ex- 
penses; shipping currency upon the order 
of correspondent banks; receiving cur- 

[19] 



THE PAYING TELLER'S DEPARTMENT 

rency shipments inward; depositing ex- 
cess supplies of currency with the Fed- 
eral Reserve Bank or other depositary; 
certifying checks; selling gold bars, and 
executing stop-payment orders. The 
duties which usually fall to the paying 
teller may best be shown in outline form, 
as follows: 

1. Custodianship of money. 

a. Receiving 

(1) Shipments inward from corre- 
spondent or other banks. 

(2) From other banking departments, 
such as receiving teller, collections 
departments, etc. 

(3) From original government sources: 

(a) Federal Reserve Bank of 
district. 

(b) United States Treasury. 

(c) United States Assay Office. 

b. Counting, examining, and strapping 
money — the money section. 

c. Storing money — the vault section. 

d. Redeeming worn and mutilated money 
at original sources — currency shipping 
section. 

[20] 



THE PAYING TELLER'S DEPARTMENT 

2. Paying out money — cashing checks, matured 
coupons, etc v upon proper identification. 

3. Disbursements for petty expenses — the petty 
cashier section. 

4. Disbursing payroll cash — paymaster section. 
o. Shipping money — currency shipping section. 

6. Depositing excess money with Federal Re- 
serve Bank, or other depositary or deposi- 
taries. 

7. Certifying checks — certification section. 

8. Settling clearing house balances. 

9. Verifying signatures of principals of ac- 
counts — signature section. 

10. Verifying stop payments — stop payment 
section. 

The paying and receiving tellers are 
closely related inasmuch as in the long 
run deposits of cash over the receiving 
teller's window and through currency 
shipments inward, approximate in ag- 
gregate value, the cash paid over the 
paying teller's window. The bank oper- 
ates as a reservoir, receiving cash from 
banks and individuals having an excess, 

[21] 



THE PAYING TELLER'S DEPARTMENT 

and paying it out to others in need of 
funds. 

Organization Chart of Paying Functions 
In order that the paying operations of 
a bank may be made clear, they are 
visualized in the organization chart, 
which follows. This shows the broad 
classification of functions and their co- 
ordinate and subordinate relationship. 



[22] 



THE PAYING TELLERS DEPARTMENT 



Cjperatio/u 

Pay/ng 
Te//er's 

t/eportment 



Cashing 
ChecAs 



ffi 



<S/<ynaf//ras 



StopPdywenk 



Money 
Sect/on 



Certification 
Section 



Money 
Sect/on 



sSett/e/ne/it 

Cfedrtfig/rtt/je 

JBo fences 



fovmaster 

Section 



Petty 
Cashier 
sSecr/on 



Money a 
i— ^5/t/p/n e/i/j 



_ Afonej/ 
Counting 



7"o 

Correspond- 
ents on Order 



To Tederj J Reserve 
&?M for Credit 
or/fede/r?p//on 



To J. Treasury 
forftedemp/ion 



fro/r> 
Correspondents 



From 
6/. 6. Treasury 



Trow Federal 
fieseryeBdnA 



Cour?//'/?g end 
Yer/fy/ng 



Jeporat/n</ 
and '/njpecfrn<j 



/n///d//n<? and 
Wrapping 



Chart Showing Organization of the Paving 
Teller's Department 



THE PAYING TELLER'S DEPARTMENT 

Cash Reserves and Cash Requirements 

Member banks of the Federal Reserve 
System are required by the Federal Re- 
serve Act to keep a reserve against de- 
posits in cash with the Federal Reserve 
Bank of their district. State banks, not 
members of the Federal Reserve System, 
may keep a cash reserve in their own 
vaults, but have the privilege of deposit- 
ing a certain part of.it for interest-earn- 
ing purposes with other banks designated 
as depositaries. 

The Federal Reserve Act does not re- 
quire member banks to maintain a re- 
serve of cash in their own vaults. Any 
cash kept in a member bank's vault does 
not count as reserve, and for that reason 
a member bank keeps only sufficient cash 
to provide for current counter require- 
ments. Since cash in reserve earns no 
interest, cash in a member bank's vault 
is likely to be kept at the lowest figure 
consistent with safe and conservative 

[24] 



THE PAYING TELLER'S DEPARTMENT 

banking policy. Among the larger 
banks, cash maintained in the vault usu- 
ally approximates two per cent, of the 
net demand deposits: for a smaller bank 
this percentage might be somewhat more. 
The cash reserve required by member 
banks of the Federal Reserve System to 
be carried against net demand deposits 
is as follows: 

Central Reserve Cities — 13 per eent. 
(New York. Chicago and St. Louis) 

Reserve Cities — 10 per cent. 

(The following cities were Reserve Cities as 
designated by the Federal Reserve Board as 
of the date of this publication: Boston. Albany. 
Brooklyn and Bronx. Buffalo. Philadelphia. 
Pittsburgh. Baltimore. Washington. Richmond. 
Charleston. Atlanta. Jacksonville. Birming- 
ham. New Orleans. Dallas. El Paso. Fort 
Worth. Galveston. Houston. San Antonio. 
Waco. Little Rock. Louisville. Chattanooga. 
Memphis. Xashville. Cincinnati. Cleveland. 
Columbus. Toledo. Indianapolis. Peoria. De- 
troit. Grand Rapids. Milwaukee. Minneapolis, 
St. Paul. Cedar Rapids. Des Moines, Dubuque. 
Sioux City. Kansas City. Mo.. St. Joseph. 

[ 25 ] 



THE PAYING TELLER'S DEPARTMENT 

Lincoln, Omaha, Kansas City, Kans., Topeka, 
Wichita, Denver, Pueblo, Muskogee, Okla- 
homa City, Tulsa, Seattle, Spokane, Tacoma, 
Portland, Ore., Los Angeles, Oakland, San 
Francisco, Ogden, Salt Lake City.) 
Other Cities — 7 per cent. 

For time deposits the reserve require- 
ment is three per cent, in each instance. 

State banks not members of the Fed- 
eral Reserve System keep their own cash 
reserves as explained above. The reserve 
requirements differ in different states. In 
New York State the legal cash reserve 
against net demand deposits varies ac- 
cording to the population of the city in 
which the bank is located, as follows: 

Total Vault Deposi- 

1. For banks in cities having taries 
a population of 2,000,000 or 

over . 18% 12% 6% 

2. For banks in cities having 
a population of 1,000,000 or 
over, but less than 2,000,000, 
and not having an office in 

a larger city 15% 10% 5% 

3. For banks in other cities 12% 4% 8% 

[26] 



THE PAYING TELLER'S DEPARTMENT 

Thus, under state banking systems, 
state banks maintain a cash reserve in 
their own vaults or in other banks acting 
as depositaries, approved by the State 
Banking Department. 

Like New York State banks, trust 
companies organized under the Xew 
York law are also required to maintain a 
cash reserve in their own vaults, as fol- 
lows : 

Total Vault Depo=i- 

1. For trust companies in tan eg 
cities having a population 

of 2,000,000 or over 15% 10% 5% 

2. For trust companies in 
cities having a population of 
over 1,000,000, but less than 
2,000,000, and not having 

an office in a larger city. ... 15% 10% 5% 

3. For trust companies in 
the boroughs of Bronx, 
Queens, Richmond, and in 
the cities of Buffalo, Syra- 
cuse, Rochester, Albany, 
Yonkers, Troy, Utica and 

Schenectady . . , 10% 4% 6% 

4. In all other cities 10% 3% 7% 

[27] 



THE PAYING TELLER'S DEPARTMENT 

Whenever state banks or trust compa- 
nies are members of the Federal Reserve 
System, they have the option of electing 
the reserve requirements prescribed by 
the Federal Reserve Act or by the State 
Bank Law, provided the state has enacted 
an "enabling" law so permitting. State 
banks or trust companies not members 
of the Federal Reserve System may keep 
a part of their vault cash with the Fed- 
eral Reserve Bank of their district if they 
so choose, in order to provide balances 
against which out-of-town collections 
may be made. 

Paying Tellers' Cages 

Each paying teller should be assigned 
a cage unit, for the transactions of which 
he is solely responsible. Since the pay- 
ing teller is intrusted with and is respon- 
sible for the money taken into the cage, 
entrance should be denied to all others, 
whether employees or outsiders. When 

[28] 



THE PAYING TELLER'S DEPARTMENT 

the paying teller is temporarily absent, 
the door of the cage should be locked and 
the cage under the surveillance of anoth- 
er teller, or guarded by a special officer. 
It is manifestly unfair to hold a teller 
accountable for money intrusted to him 
unless he is fortified with satisfactory fa- 
cilities for safeguarding it. 

To provide an adequate system of in- 
ternal check, paying tellers should never 
have direct access to customers' ledgers. 
The paying teller should, of course, know 
something of the status of customers' 
accounts. This he can learn by having 
the ledger clerks supply him with sheets 
showing the approximate balances of 
customers' accounts. Although integrity 
of tellers is always presumed, still a sys- 
tem of internal check as fool-proof as 
possible, and prearranged to prevent 
possible defalcations through collusion 
with dishonest ledger clerks, should be 
provided. By collusion with an un- 

[29] 



THE PAYING TELLER'S DEPARTMENT 

ness handled by each teller, who both 
receives and pays for accounts, say, from 
A to C, D to G, H to M, N to T, and 
U toZ. 

There are two distinct advantages of 
the unit paying-receiving system. One 
is that it permits of specialization. Cer- 
tainly one chief requisite of a competent 
paying teller is thorough acquaintance- 
ship with his customers — positively know- 
ing their identity, the character of their 
business and accounts, what services they 
require, their financial status and respon- 
sibility, and other variations of the per- 
sonal equation. The unit system enables 
«ach teller to become personalty acquaint- 
ed with the customers assigned to him 
and to call them by name, because the 
group of customers which he serves is 
definitely fixed and limited. By this 
adaptation the teller can give his cus- 
tomers better and prompter service. If 
it is advisable that each teller know all 

[30] 



THE PAYING TELLER'S DEPARTMENT 

scrupulous ledger clerk it is possible for 
a paying teller, for instance, to hold out 
amounts of cash received in currency 
shipments inward continuously by fail- 
ing to credit the customers' account upon 
receipt of the shipment. 

The Unit Paying-Receiving System 

In the interests of more effective serv- 
ice to customers, the unit paying-receiv- 
ing system appears to be growing in 
popularity, especially among the larger 
city banks. Under this arrangement a 
single teller plays a double role — that 
of paying and receiving teller. 

The advantage of the unit system is 
best demonstrated among banks having 
many active accounts, whether large or 
small, the customers' accounts being di- 
vided into sections of the alphabet, and 
each section assigned to a single teller. 
Customers' accounts can be divided with 
a view to equalizing the volume of busi- 

[ 31 1 



THE PAYING TELLER'S DEPARTMENT 

the customers of the bank, tellers can at 
intervals be shifted from cage to cage. 
A second advantage of the unit paying- 
receiving system is that it enables the 
customers to make deposits and cash 
checks at the same time. It thus makes 
it unnecessary, especially on busy days, 
for customers to stand in two line forma- 
tions awaiting their turn. 

It might be objected that it is contrary 
to a good system of internal check to 
place one person in both receiving and 
disbursing roles. Provided the unit teller 
has no access to the customers' ledgers 
there is perhaps no more opportunity for 
defalcation or abstraction of funds under 
this arrangement than any other. It is 
quite as possible, for instance, for a re- 
ceiving teller to destroy a deposit slip 
where a pass book is not presented and 
temporarily cover up an abstraction of 
cash as for a teller in the unit system. 
Perhaps the ideal system is to arrange 

[32] 



THE PAYING TELLER'S DEPARTMENT 

paying and receiving cages for the same 
sections of the alphabet adjacent to one 
another and to operate the cages by dif- 
ferent tellers, thus making it less possible 
for a unit teller to cover up abstractions 
from receipts by virtue of his role as 
money custodian. In one bank the idea 
of alphabetization of accounts has been 
extended to include not only making de- 
posits and cashing checks, but likewise 
to certifications, vouchers, statements, 
pass books, and stationery. 

The unit system is practicable, of 
course, only where the number of ac- 
counts is sufficiently numerous and active. 

Methods of Safeguarding the Paying 
Tellers Cash 

Perhaps the foremost safeguard in 
protecting the paying teller's cash is the 
character and moral responsibility of the 
teller himself. The immediate nego- 
tiability of cash makes it subject to de- 

[33] 



THE PAYING TELLER'S DEPARTMENT 

-signs of unscrupulous persons, both with- 
in and outside the bank, and only persons 
of the highest moral integrity as demon- 
strated by past acts and having the best 
of references, should be engaged as pay- 
ing tellers. It goes without saying, that 
paying tellers should be bonded with 
some fidelity insurance company for an 
amount certainly as high as any other 
person in the bank, and considerably 
more than for the average. It is un- 
necessarily expensive to bond a paying 
teller for the maximum amount of cash 
over which he is likely to have control for 
the reason that most banks procure a 
blanket policy to indemnify themselves 
against all insurable losses of whatsoever 
•nature. 

Another important factor in the safe- 
guarding of the paying teller's cash is 
the location of the paying teller's depart- 
ment with reference to the bank's en- 
trance or entrances. Placing the paying 

[34] 



THE PAYING TELLER'S DEPARTMENT 

teller's department at some distance from 
the entrances seems to be an almost uni- 
versal practice among city banks, al- 
though this is not true of most country 
banks. A canvass of New York banks, 
for instance, reveals that the paying 
tellers" cages have been removed to the 
rear of the bank corridor in a conspicu- 
ously large percentage of cases. The ob- 
vious reason for the removal of paying 
tellers' cages from locations adjacent to 
the entrance is to obtain better protection 
against possible attacks of hold-up men. 
With the added precaution of engaging 
special guards who are stationed at regu- 
lar intervals along the corridor, persons 
attempting to perpetrate a hold-up of 
the paying teller are bound to be frus- 
trated in their efforts, because of the 
necessity of passing through the entire 
length of the corridor, sentineled by 
armed guards, before making their exit. 
Among city banks the employment of 

[35] 



THE PAYING TELLER'S DEPARTMENT 

special armed guards in uniform is an 
almost universal practice. Although 
armed guards act as guides and inform- 
ants to customers, their special purpose 
is to discourage and prevent possible 
burglaries, hold-ups or assaults. Thus 
the purpose is preventative in character 
rather than being a means of apprehend- 
ing culprits after an assault has been 
committed. It is far better to prevent 
a burglary or assault than to attempt to 
recover a loss or repair an injury after 
it has occurred. The chief element in 
breaking down the morale of potential 
yeggmen is the certain knowledge that 
the bank is guarded by a corps of able 
and alert armed guards. The daring of 
yeggmen is in direct proportion to the 
chances of success. No assault is likely 
to be made when the promise of success 
is slight. 

Most banks are equipped with various 
protective apparatus. Among the most 

[36] 



THE PAYING TELLER'S DEPARTMENT 

important are: (1) Electric signal sys- 
tems communicating with a local burglar 
alarm company prepared upon alarm to 
dispatch detectives in case of trouble. 
For night protection this system usually 
involves a periodical turning in of sig- 
nals from signal boxes located in various 
parts of the bank. (2) Emergency 
alarms with buttons placed at the finger- 
tips of tellers to call special guards lo- 
cated at other stations in the bank. (3) 
Protection of the paying-teller by erect- 
ing bullet-proof armored glass in front 
of paying tellers' cages. (4) Automatic 
door-closing device operated from the 
paying teller's cage to close all means of 
exit to hold-up men who may attempt 
an assault. (5) Burglar-proof vaults 
with time locks and alarm signals. 

Such devices have received increasing 
attention and have become more univer- 
sally adopted in recent years. 

Paying tellers' cages should always be 

[37] 



THE PAYING TELLER'S DEPARTMENT 

locked in the temporary absence of the 
paying tellers, and in no event should 
all cages be vacated simultaneously until 
after the close of business when the 
money has been removed to the vault. 
In no case should bills be exposed to 
the view of customers by lying loose on 
the counter. Bills should always be care- 
fully assorted in compartments of the 
drawers in the paying teller's cage, or in 
the auxiliary cage safe. 

Except for small amounts maintained 
in several departments where necessary, 
all the cash of the bank should be held 
by the paying teller on account of his 
special facilities for safeguarding it* 
Whenever cash is delivered from one de- 
partment to the paying teller, it should 
be guarded in transit and receipted for 
when delivered. 

The paying teller is responsible for the 
safe-keeping of the till monej^ over which 
he has exclusive control. The surplus 

[38] 



THE PAYING TELLER'S DEPARTMEN r 

money stock — in excess of current needs 
— is usually held in custody by an officer 
or officers in conjunction with the paying 
teller. In other words, the bulk of the 
cash is kept under double or triple joint 
control. Joint control is secured by 
placing at least two combinations to each 
compartment of the vault, only one of 
which is known to a single person. Since 
no one person knows both the combina- 
tions unlocking the safe or vault the 
withdrawal or deposit of money in the 
vault, requires the presence of at least 
two persons who become mutual wit- 
nesses to the transaction. The duty of 
setting the time lock is usually imposed 
upon the paying teller. 

Cashing Checks 

In cashing checks, paying tellers must 
exercise extraordinary caution to see that 
funds are paid only to properly identified 
persons and upon proper authorization, 

[39] 



THE PAYING TELLER'S DEPARTMENT 

A paying teller is involved in many risks 
in cashing checks, and experience, agility 
and composure are required to create 
necessary confidence and assurance that 
the funds are properly disbursed and yet 
perform the work with necessary speed 
and courtesy. 

Familiarity with the law of negotiable 
instruments and particularly with the law 
in regard to checks is almost indispen- 
sable for paying tellers. Many risks can 
be eliminated and errors avoided if pay- 
ing tellers are thoroughly cognizant of 
the essential elements and structure of a 
check. 

A check is an order drawn upon a 
bank (drawee) by a depositor (drawer 
or maker and payer) to pay a certain 
sum of money to a third party (payee) 
upon demand. The elements of a check 
may be classified as essential and non- 
essential, both of which are analyzed 
as follows: 

[ 40 1 



THE PAYING TELLER'S DEPARTMENT 

ESSENTIAL ELEMENTS 

1. The phrase ''pay to the order of" makes 
the cheek an unconditional promise to pay upon 
demand, and imparts negotiability to the instru- 
ment. The single word "pay" may also be used, 
except that such a check is not negotiable, and is 
payable only to the person named as payee. 

2. Name of payee — person in whose favor the 
check is drawn. Checks are sometimes made out 
payable to ''self", "currency", "bearer", or "cash", 
which is allowable. 

3. Amount payable in figures. 

4. Amount payable written out in words. 
•3. Name and location of drawee bank. 

6. Signature of drawer or maker. In case of 
a corporation the signature and counter signatures 
of designated officers are necessary. The signature 
is the final touch without which the check is value- 
less. 

T. Endorsement. The check should be en- 
dorsed as drawn, either in blank or by a special 
endorsement. Restrictive or qualified endorsements 
should not be accepted. 

[41] 



THE PAYING TELLER'S DEPARTMENT 

NON-ESSENTIAL ELEMENTS 

1. Location. Name of city in which maker or 
drawer is located. 

2. Date of drawing the check. 

3. Number of check. 

4. Transit number, indicating the name and 
location of the drawee bank according to the uni- 
versal numerical transit system. 

The paying teller in cashing checks 
must observe the following points and 
be certain that there are no irregulari- 
ties, informalities or discrepancies which 
might involve the bank in a loss: 

1. Identification of presenting party. 

2. Date. 

3. Filling. 

4. Alterations. 

5. Signature : 

a. Authority to sign. 

b. Forgery. 

6. Stop payment. 

7. Financial responsibility. 

8. Whether a home debit or drawn on another 

bank. 

9. Endorsement. 

[42] 



THE PAYING TELLER'S DEPARTMENT 

Identification — The identity of the 
person presenting a check for payment 
should be established beyond doubt 
because the bank is responsible for pay- 
ing out money to an unauthorized payee. 
When an account is opened the identity 
of the principals of the account should 
be established immediately. The paying 
teller should consult the officer opening 
the account when the first check is pre- 
sented. If the payee's representative 
presents the check for payment the 
agent's endorsement should be procured 
as evidence of payment. 

Checks should ordinarily not be cashed 
for strangers unless endorsed by a de- 
positor of the bank. Oftentimes the 
maker of a check will guarantee the en- 
dorsement on it. In the case of a draft 
drawn out-of-town, the correspondent 
should forward a specimen of the payee's 
signature in a letter of advice in advance 
of its presentation for payment. Pay- 

[43] 



THE PAYING TELLER'S DEPARTMENT 

ment of checks should always be declined 
or referred to an officer, in cases where 
identity cannot be established. 

Date — The bank has authority to pay 
a check only when the check is dated as 
of the day of presentation, or antecedent 
thereto. Neither should checks dated 
'ahead (postdated), nor checks more than 
six months old (stale) be paid. Checks 
are in most instances presented soon 
after they are drawn, and when they are 
held out there is a presumption that 
something is wrong. For instance, it 
may have been lost and found and pre- 
sented by a person not having good 
title to it. Furthermore, the account 
may have been closed in the meanwhile. 

When a check is presented which is 
more than six months old it is well to 
consult the* principals of the account for 
instructions, and also to verify the bal- 
ance in the account before cashing it. 

Since the date is not an essential ele- 

[ 44 ] 



THE PAYING TELLER'S DEPARTMENT 

ment, an undated check is valid and it 
is unnecessary to insert the missing date. 

Filling — The amount written in 
words should agree with the amount in 
figures. If there is a discrepancy be- 
tween the written words and figures, it 
is best to ask the presenting party to 
secure a corrected check or else to make 
the correction and place his signature 
immediately thereunder. 

When there is a discrepancy between 
the written words and figures, the 
amount denoted by the words is the sum 
payable. Wherever the authority of the 
drawer is given to change the amount in 
figures to correspond with the words, 
the paying teller should rule out the 
wrong amount in figures and place the 
correct amount above so that no error 
will be made when the amount is posted 
to his cash proof sheet or by adding 
machine clerks, ledger clerks, or state- 
ment clerks, after the check leaves the 

[ 45 ] 



THE PAYING TELLER'S DEPARTMENT 

paying teller's cage and is routed through 
the various departments of the bank. 

Alterations — Possible alterations of 
checks are always a source of great an- 
noyance and risk. Many mechanical 
contrivances have been invented in an ef- 
fort to minimize the chances of a dishon- 
est person raising a check or changing 
the payee's name. Some machines write 
the words and figures in the fibre of the 
paper by injecting indelible ink into the 
bruised portion which also covers the 
payee's name. Another device cuts the 
words and figures into the check. Still 
another method is to indicate on the 
margin of the check, or above the sig- 
nature the maximum limit by imprint- 
ing the words, "Not over $ ." Postal 

money orders are protected on the left- 
hand margin in this way. These va- 
rious devices are simple and inexpensive 
means of insuring against losses arising 

[46] 



THE PAYING TELLERS DEPARTMENT 

through the raising of checks, and cus- 
tomers should be educated in their use. 

Paying tellers should see that there is 
no discrepancy between the filling and 
the maximum limit indicated by any type 
of check-protecting device. If. for in- 
stance, a check should be written for 
$1000 and the maximum limit of $100 is 
indicated,, the bank is liable for any 
amount paid in excess of 8100. 

Signature — The signature should be 
examined for genuineness. If the pay- 
ing teller does not know the signature — 
as in the case of a new account — he must 
consult the signature file, which should be 
accessible, and refer to the appropriate 
signature card to see that the signature 
corresponds. The signature of the prin- 
cipals of each account are secured on a 
signature card when the account is 
opened. Some banks procure specimen 
signatures on three different cards to be 
used in the paying teller's and new busi- 



THE PAYING TELLER'S DEPARTMENT 

ness departments and at the check desk. 
Other banks make a practice of photo- 
graphing the signature cards, thus obvi- 
ating the necessity of requesting custom- 
ers to sign more than one card. 

In the case of corporation accounts, 
the signature of each official authorized 
to sign, either as full authority or for 
counter signature, is obtained. Copies of 
resolutions of the Board of Directors 
empowering such officials to sign are also 
procured and lodged in the credit de- 
partment files, central files, or elsewhere. 

The paying teller must see that the 
signature is not only genuine, in the case 
of a person signing for a corporation, 
that he has power to sign and that the 
power to sign is still in force. 

Stop Payments — The paying teller 
should examine the stop payment sheets 
to see that no stop payment orders have 
been issued against the check presented. 
In a small bank it is quite possible for the 

[48] 



THE PAYING TELLER'S DEPARTMENT 

paying teller to retain current stop pay- 
ment orders in his mind. (See section 
entitled, Stop Payments.) 

Financial Responsibility — If the 
paying teller is not thoroughly familiar 
with the financial responsibility, or knows 
that the account is frequently overdrawn, 
he must ascertain from the ledger clerk 
whether sufficient funds are in the ac- 
count to meet the check. The paying 
teller is made responsible in most banks 
for seeing that checks are not paid where 
insufficient funds or no funds are in the 
account. Among larger banks where the 
customers' ledgers are placed at some dis- 
tance from the paying tellers' cages, this 
information is ascertained by means of 
the telautograph. 

In Australia before a check is cashed 
it is necessary for the customer to go to 
a separate window for identification and 
verification of the account, after which 
the check is certified. The payee then 

[49] 



THE PAYING TELLER'S DEPARTMENT 

goes to the paying teller's window where 
the check is paid without question. 

Other Banks' Checks— Paying tell- 
ers are usually instructed not to cash 
checks drawn on other banks, whether 
located in the same city or out-of-town. 
Other bank checks are referred to an of- 
ficer and are cashed only when so ap- 
proved. 

Clearing house rules generally provide 
for exchange charges on checks drawn 
on out-of-town banks not in the area of 
par collections. Inasmuch as pecuniary 
penalties are imposed for non-observance 
of this rule, paying tellers are charged 
with making proper deductions for ex- 
change on out-of-town checks drawn on 
banks not in the area of par collections in 
accordance with the schedule of exchange 
charges prescribed by the local clearing 
house association. 

Endorsement — The endorsement 
must be properly affixed. Checks should 

[50] 



THE PAYING TELLER'S DEPARTMENT 

be endorsed exactly as drawn — either in 
blank or by special endorsement. Re- 
strictive or qualified endorsements should 
not be accepted. Checks substituting 
the word "Pay" for the phrase "Pay to 
the order of" are not negotiable, and are, 
therefore, payable only to the original 
payee. 

Cash or Bearer Checks — Checks 
payable to "cash", "currency", "self", or 
"bearer" require no endorsement when 
presented by the drawer. In case the 
drawer himself does not present the 
check so drawn, the endorsement of the 
presentor — drawer's representative — 
should be requested. Technically this 
cannot be insisted upon, but inasmuch 
as cash is being paid to a person other 
than the drawer, the paying teller pro- 
tects himself in case the funds are mis- 
appropriated. Evidence of the presenta- 
tion and payment of the check is had by 

[51] 



THE PAYING TELLER'S DEPARTMENT 

reason of the endorsement of the drawer's 
representative. 

Matured Coupons — Paying tellers 
are usually authorized to pay matured 
coupons of Government bonds — especial- 
ly the Liberty issues — when presented in 
small amounts in envelopes for the con- 
venience of customers. 

Cashing Expense Slips — The petty 
expenses incurred by a bank are usually 
paid in cash. Vouchers or expense slips 
are made out, explaining the nature of 
the expenses. When approved by prop- 
er officials, expense slips may be cashed 
by paying tellers. 



When checks are presented for pay- 
ment the paying teller should ask the 
customer what denominations he desires. 
Bills should be counted twice. If an 
automatic cashier for fractional coins is 

[52] 



THE PAYING TELLER'S DEPARTMENT 

provided for counting change a great 
saving of time is effected because coins 
do not need to be counted twice. 

The principal reasons for cashing 
checks rather than depositing them for 
credit are to provide for company pay- 
rolls, petty cash funds, and current ex- 
penses of individuals. Wages and sala- 
ries are generally paid on Saturday, 
thereby occasioning an extraordinarily 
heavy demand for payroll cash on Fri- 
day and Saturday. When payroll de- 
mands are known to be heavy, it is de- 
sirable for banks to request such cus- 
tomers to submit their payroll checks, 
together with a list of denominations of 
coin and currency desired, a day ahead 
so that the paying teller will have ample 
opportunity to prepare the amount. 

The Paying Teller's Cash Proof 

The paying teller's proof is compara- 
tively simple. Knowing how much cash 

[53] 



THE PAYING TELLER'S DEPARTMENT 



17&I& (ZI2^27IF>^F^ 



/ Cash Ba fence atBeg//w/hjg ofBoj/hess . . _ 

2.Addiiiof?af /Iwov/jts fron /Vo/ieyJectio/? . . . .^L 
3. Currency Shipments /award: 



7,c/ret 

ATO. 


/) mount 


T/cke/ 

fro- 


/Imovt? t 


Mo- 


Asrrot/t/t 


Aro. 


/)/?lO(/t7£ 



















































H /?ece/p£s from uDepar£/??e/7/s: 



Te//er 


Co//ec//o/? 

7~e.//&r 


7~<2//e.s* 


Coiypo/? 
Co//ect'o/7 




































/sepi:. 


sSec//r///es 





































J 



S fArc/iancje £<9r/7//?gs : 





































$ 



6. Tot at Receipts £_ 

7. £aia/?ce at C/ose 0/ J?t/ji/?ess . . . . . .£_ 



TOTAL , == 
Paying Teller's Cash Proof 

[54] 



THE PAYING TELLER'S DEPARTMENT 
/?— 

/. GjsA/ng Checks: 



//oose. 




7r<3ns/t 


Afesse/?^/^r 


Coupons 



























































































































Tola/ C/iec/r-s £_ 
Z. Currency ^Sft'/pmertts Oufwaro': 



Wo. 


/}/??6'l//ft 


Wo. 


/ImoL/fit 


Wo. 


dwoi/nt 


'>:■■ 


/}/?70V/lt 



















































J. Petty £*/>e/7Jes: 



# Payro// 

S. /W/jce//a/?ecws 



£_ 

J 



TOT/IL. _ 
Paying Teller's Cash Proof 



[55] 



THE PAYING TELLER'S DEPARTMENT 

with which he starts the day's business, 
the paying teller should have on hand at 
the close of the day, a sum representing 
the amount he took to his cage, plus any 
exchange earnings, plus currency ship- 
ments inward, less an amount equal to 
the sum of checks or other cash items 
(matured coupons and expense slips) 
which were cashed during the day and 
are on hand. 

For purposes of routing to other de- 
partments, checks which have been cashed 
are separated from time to time during 
the day by the paying teller in several 
classifications — clearing house checks, 
home debits, out-of-town checks, and 
checks to be collected by messenger. 
These are listed item for item in separate 
columns on the cash proof sheet, a form 
of which is shown on pages 54 and 55. 



56] 



THE PAYING TELLER'S DEPARTMENT 

Bisks of the Paying Teller 

The paying teller's risks run parallel 
to the precautions he must observe in 
cashing checks. Whereas the receiving 
teller may be defrauded only by receipt- 
ing for more than he takes in, by accept- 
ing counterfeit money or raised bills, or 
accepting checks that are forged or irreg- 
ularly endorsed, the paying teller has 
many opportunities for committing er- 
rors involving the bank in possible losses. 
He may over-pay, over-certify, or pay 
to an unidentified person. He may pay 
a check for an account having insufficient 
or no funds, or which does not exist at 
all. He may pay a postdated or stale 
check. He may pay a check against 
which a stop payment order has been 
issued. He may pay an altered or 
forged check. Any one of these errors 
raises legal questions as to liability in the 
case of loss and whether the bank has a 
cause for action to recover such losses as 

[57] 



THE PAYING TELLER'S DEPARTMENT 

may be sustained. When errors of this 
nature are made, the bank's principal 
protection lies in the moral and financial 
responsibility of its customer. It is for 
this reason that conservative banks are 
extremely particular about the character 
of the principals of the accounts which 
they select or accept. 

AVhile court decisions are oftentimes 
at variance on the same questions, and 
conflicts in decisions of state and federal 
courts are numerous, in most of the above 
cases the bank would at common law be 
technically responsible on the ground of 
failure to use due diligence. In any 
event, good service and economy require 
that paying tellers be continually on the 
alert to avoid the creation of embarrass- 
ing situations and legal involvement, 
both of which, to say the least, are always 
expensive. (See Appendix I.) 
Stop Payments 

A depositor has the legal right to stop 

[58] 



THE PAYING TELLER'S DEPARTMENT 

payment on checks which he has previ- 
ously drawn. This right places an obli- 
gation upon banks which must be met 
by maintenance of careful records and 
exacting and scrupulous observance of 
instructions on the part of paying tellers. 

The principal reasons for issuing stop 
payment orders are cancellation of pur- 
chase orders, to prevent cashing of a lost 
check by a dishonest person who may 
have come into possession of it, and to 
prevent the payment of an original check 
when the duplicate has already been paid. 
Paying tellers would do well to make a 
mental note of the customers who are in 
the habit of stopping payment on their 
checks. 

In order to make a bank liable, a stop 
payment order must be presented in writ- 
ing and must reach the bank on which 
the stopped check is drawn before it is 
presented. A telegraphic request to stop 
payment is legally enforceable, but an 

[59] 



THE PAYING TELLER'S DEPARTMENT 

oral or telephonic one is not. Banks 
usually endeavor to stop payment on oral 
or telephonic instructions, but are not 
always able to do so. A form of stop 
payment order follows: 



Date 

Kindly stop payment upon a check drawn 
nn da 


by 

ted 


(us or me) 
The 


(name of 
numlber of the 

Very truly 


payee) 
check is ... . 




yours, 




(Name 


of drawer) 





It will be noticed that the stop pay- 
ment order gives four facts — the number, 
date, amount, and payee of the check. 
Paying tellers and check-desk clerks keep 
a list of the stop payment orders con- 
tinually before them. This list is usual- 
ly arranged in alphabetical order, accord- 
ing to the names of the drawers who 

[60] 



THE PAYING TELLER'S DEPARTMENT 

have issued the stop payment orders. 
The paying teller should keep in mind 
all stop payment orders and the list 
should be scrutinized before a check is 
cashed. 

Foreign banks issue checks in original 
and duplicate, or, as is sometimes desig- 
nated, first and second of exchange. Du- 
plicates are not paid until it is deter- 
mined by inspecting the statement of 
account (statement department) or can- 
celled checks (voucher department) to 
see whether the original has been paid. 
At the time a duplicate check is paid, a 
stop payment order is automatically 
placed against the original. Since the 
possible previous payment of the original 
is always verified, when a duplicate is 
presented for payment, it is not necessary 
to place a stop against a duplicate at the 
time the original is paid. On the other 
hand, when the original is presented, pro- 
vided there is no stop payment against 

[61] 



THE PAYING TELLER'S DEPARTMENT 

it, it is paid without verifying the pay- 
ment of the duplicate through the state- 
ment or voucher records. 

Acknowledgment of a stop payment 
order should be made by a form letter 
to read as follows: 



We are in receipt of your letter of , 

requesting us to stop payment of your draft 

No , dated , for $ , 

to the order of , and the 

matter will have our careful attention. The draft 
does not appear to have been paid since date of 
issue. 



Acknowledgments are also made of 
cancellations of stop payment orders. 
This form letter may read : 



[62] 



THE PAYING TELLER'S DEPARTMENT 



We are in receipt of your letter of the 

and in accordance with your instructions we have 
removed the stop payment order which we had 
placed against your draft No , dated 

, in favor of 

for $ 



Stop payment sheets must be dupli- 
cated for use at the check-desk so that 
checks coming in through the clearing 
house upon which stop payment orders 
have been placed, may be stopped and 
returned to the presenting bank. (See 
Appendix I.) 

Alterations and Forgeries 

In the great majority of cases decided 
by the courts a bank is liable to the 
drawer for paying either a forged check 
or a check that has been raised. Just 
as a bank is presumed to know the signa- 
tures of its customers, so is it required to 

[63] 



THE PAYING TELLER'S DEPARTMENT 

use due diligence in protecting its cus- 
tomers against losses arising through the 
raising of the amount of a check. 

The chief means of prevention of 
raised checks is the use of various check 
protecting devices. Both banks and 
manufacturers of check protecting de- 
vices have made some progress in edu- 
cating depositors to protect themselves 
against this method of defrauding. Many 
special devices have been placed on the 
market for the prevention of check rais- 
ing, and have proved exceedingly useful 
in minimizing this dishonest practice. 

Paying a forged check is one of the 
greatest risks with which a paying teller 
must contend. The chief means of com- 
bating this risk is for a bank to educate 
its depositors to properly protect their 
blank checks. Depositors should keep 
their blank check books under control 
and know what becomes of each one of 
the series. They should not sign checks 

[64] 



THE PAYING TELLER'S DEPARTMENT 

in blank or give blank checks away to 
strangers. A customer cannot recover 
against a bank which has paid a forged 
check if the depositor is guilty of negli- 
gent acts. 

Just as forgeries can be prevented if 
blank checks are made inaccessible to 
those who might use them for purposes 
of committing forgery, so the raising of 
checks can be prevented by the use of 
latest improved check protecting devices. 
(See Appendix I.) 

Certifications 

Among smaller banks checks are certi- 
fied at the paying teller's window. Larger 
banks usually maintain a separate win- 
dow or windows, usually adjacent to the 
paying teller's window, whenever the 
volume of certifications is sufficiently 
large to warrant a separation of func- 
tions. The certification section of a bank 
is a part of the paying teller's depart- 

[65] 



THE PAYING TELLER'S DEPARTMENT 

merit, however, because certifying a 
check is equivalent to paying it. When 
a check is certified, the bank is absolutely 
bound to pay it because it becomes an 
obligation of the bank instead of being 
an order on the bank. A certified check 
certifies that the depositor has sufficient 
funds for its payment and that these 
funds have been set aside by the bank 
for the express purpose of its payment, 
and therefore payment cannot be refused 
because of insufficient funds. 

When a check is presented at the win- 
dow for certification the drawer's account 
is inspected on the ledger to see that 
sufficient funds to cover the amount are 
on deposit. Whenever the bookkeeping 
department is located on another floor 
or at some distance from the certifica- 
tion window, this information is commu- 
nicated by means of the telautograph. 
If the funds are adequate, the check is 
certified and the amount thereof is im- 

[66] 



THE PAYING TELLER'S DEPARTMENT 

mediately deducted from the credit bal- 
ance of the customer's account. 

A check is certified by stamping or 
writing across its face the word "Certi- 
fied" or "Accepted", together with the 
date, the bank's name, and the name of 
the officer authorized to make certifica- 
tion. 

Since a certified check becomes an ob- 
ligation of the bank, when a check is 
certified the drawer's account is reduced 
(charged), and "certified checks" ac- 
count (in the general ledger) is in- 
creased (credited). When certified 
checks are returned through the clear- 
ing house or other channels the account 
"certified checks" is reduced (charged). 
Thus the balance of this account repre- 
sents the total amount of certified checks 
outstanding. 

Although a bank is not obliged by law 
to certify checks for its customers, among 
the banks in the larger cities — especially 

[67] 



THE PAYING TELLER'S DEPARTMENT 

in New York — certification business 
forms a very important service feature. 
Certified checks are extensively used in 
those types of business where it is im- 
portant to receive the equivalent of cash, 
without at the same time using cash, such 
as in brokerage transactions, stock and 
bond transactions, payment of loans, and 
real estate transfers. 

A check may be certified at the in- 
stance of either the holder of the drawer. 
/ Certification at the instance of the holder 
releases the drawer and all endorsers 
from further liability They are out of 
the transaction entirely and the holder 
has recourse against the bank only. 
Should the bank fail, for instance, the 
holder of such a certified check has no 
cause of action against the drawer. 
Where a bank certifies a check at the in- 
stance of the drawer, however, the latter 
is not released from liability. Should 
the bank upon which it is drawn fail be- 



THE PAYING TELLER'S DEPARTMENT 

fore the check is presented, the holder 
still has recourse against the drawer. 
(See Appendix I.) 

Sources of Money Supply 

Since it is the duty of the paying teller 
in conjunction with the money depart- 
ment to maintain an adequate supply 
of money to meet the requirements of 
local customers and all out-of-town cor- 
respondent banks, it is necessary that he 
be familiar with the various sources of 
money supply. It is also necessary to 
note the procedure required to redeem 
money and what disposition to make of 
temporary excess supplies. Sources of 
money supply may be broadly classified 
in two main divisions: 

I. Old Money — already in circulation. 

a. Cash deposits received from customers through 
the receiving teller's windows. 

b. Cash received from other departments of the 
bank — in relatively small quantities — such as 

[69] 



THE PAYING TELLER'S DEPARTMENT 

note teller, city collection, coupon collection, 
money orders and cashier's checks, and pro- 
ceeds of collection items. 

c. Currency and coin shipments inward — by reg- 
istered mail or express — from out-of-town 
correspondents or other banks. 

d. Federal Reserve Banks (see below). 

2. New Money — from original Government 

sources. 

a. Federal Reserve Banks. Since the United 
States sub-treasuries'* have been closed and 
their functions taken over by the various Fed- 
eral Reserve Banks, all kinds of circulating 
media, whether paper or metallic money, ex- 
cepting national bank notes, can be procured 
from the Federal Reserve Banks or branches. 
National Bank Notes may, however, be de- 
posited with the Federal Reserve Bank for 
immediate credit. 

Since the supplies of new money (currency 
from the Bureau of Engraving and Printing 
and coins from the mints) are limited, the 
Federal Reserve Banks endeavor to parcel 
out new supplies to* the member banks ratably 

*The operations of the Sub-treasuries as a part of the 
fiscal system were required to terminate on June 30, 
1931, by an Act of Congress. Sub-treasury operations 
actually ceased December 6, 1920. 

[70] 



THE PAYING TELLER'S DEPARTMENT 

so that each bank gets its fair quota of the 
new currency available to enter circulation. 
This does not mean that money that has 
already been used in circulation is not pro- 
curable from Federal Reserve Banks. When 
the supply of crisp bills or new coins is ex- 
hausted the demand of banks for currency is 
filled by distributing old currency. 

b. United States Treasury. National bank notes 
can be secured from the United States Treas- 
ury only. They are not to be had from the 
Federal Reserve Banks. New national bank 
notes are obtainable in exchange for muti- 
lated and worn ones, or by increasing the 
deposit in the 5 per cent, redemption fund. 

c. United States Assay Offices. Gold bars are 
procured from the various United States 
Assay offices, except for small amounts under 
$5,000, which may be bought from bullion 
brokers. As an accommodation to out-of-town 
member banks, Federal Reserve Banks also 
sell gold bars. 

Supplies of coin or currency from the 
Federal Reserve Banks are shipped to 
member banks without charge to them 
for express and insurance costs. Like- 

[71] 



THE PAYING TELLER'S DEPARTMENT 

wise, when member banks have excess 
supplies of cash on hand, they are 
shipped to the Federal Reserve Bank of 
the district without costs, which are borne 
by the Federal Reserve Bank. Thus 
worn and mutilated currency may be 
sent to the Federal Reserve Bank, for 
either redemption and exchange, for an 
equivalent amount of new currency, or 
for building up the legal reserve ac- 
count; excess money supplies are sent for 
credit only. 

The Money Department 

The money department is in reality a 
section of the paying teller's department. 
Its function is to receive from various 
departments of the bank, and from bank- 
ing correspondents, cash charged to the 
paying teller, and to count, inspect and 
verify it. In the larger banks the work 
of counting, inspecting and verifying 
money requires much detailed and exact- 

[72] 



THE PAYING TELLER'S DEPARTMENT 

ing attention because of the large 
amounts handled each day. 

The money counting section should be 
enclosed in a separate cage in order to 
prevent the entrance of those not con- 
nected with the work. Each money 
counter should be provided with a sep- 
arate desk cage so that he may segregate 
the cash assigned to him for counting, 
inspecting and verifying. In large banks 
a special guard is usually provided to 
protect money counters from possible 
holdups. 

While the procedure in the money de- 
partment will vary according to the size 
of the bank, it is usual for the paying 
teller at the beginning of each day's 
business to charge the head of the money 
counting section with that portion of the 
bank's money which remains to be sorted, 
inspected and counted. A certain amount 
of cash is received daily by mail or ex- 
press and over the counter which is ac- 

[73] 



THE PAYING TELLER'S DEPARTMENT 

cepted subject to count, i. e., with the 
understanding that if it is not correct, an 
adjustment may be made in the account 
of the depositor for the difference, wheth- 
er over or short. The money which the 
money counting section receives in the 
morning from the paying teller, who 
withdraws it from the vault, may be 
divided into three parcels: 

1 . Odd — various . 

This parcel consists of odd amounts of both 
mutilated and currency fit for circulation, of 
different kinds and denominations, in insuffi- 
cient lots to make up standard size packages. 

2. Good — various. 

This parcel consists of paper money which is . 
fit for circulation, but of various kinds and 
denominations in insufficient lots to make up 
standard size packages. 

3. Held. 

This parcel consists of uncounted paper money 
which has been received in packages by mail 
or express and over the window, which has not 
yet been verified. 

[74] 



THE PAYING TELLER'S DEPARTMENT 

These three parcels of money are then 
distributed to the various persons desig- 
nated to count and inspect money and 
charged to them by the head of the 
money counting section. 

The work of the clerk in the money 
counting section may be divided under 
the following heads: 

1. Separating money by kinds. 

2. Separating by denominations. 

3. Sorting the good or usable currency from the 
worn and mutilated currency which is unfit for 
circulation. 

4. Detecting counterfeit coins and counterfeit 
and raised bills. 

5. Verifying the count. 

6. Strapping packages after they have been 
sorted by denominations and kinds into stand- 
ard sized packages, preparatory to storing. 

7. Initialing straps on the packages after the 
bills have been counted. 

8. Submitting counted packages which have been 
assigned to them by the head of the section 
and proving with the head of the section. 

[75] 



THE PAYING TELLER'S DEPARTMENT 

Separating by Kinds — What a Paying 
Teller and Money Counter Should 
Know About the Various Kinds of 
Money 
To the uninitiated all kinds of money 
are identical. In reality, however, there 
are seven kinds of paper money and four 
of metallic money which vary in their 
security, redeemability, volume, elasticity 
and legal tender qualities. Some kinds 
of money have a full 100 per cent, re- 
serve behind them; others have not. Some 
are obligations of the U. S. Govern- 
ment; others are obligations of a Federal 
Reserve or National Bank. In ordinary 
times one kind of money is as good as 
another because they have equal pur- 
chasing power. The differences in the 
eleven kinds of money may prove to be 
important, however, in case of a serious 
currency disturbance, just as in the 
"greenback" period from 1862 to 1869, 
when certain kinds of money were at a 

[76] 



THE PAYING TELLER'S DEPARTMENT 

discount in terms of legal standard 
money. 

Legal tender is money of a character 
which by law a debtor may require a 
creditor to receive in payment, in the 
absence of any agreement in the con- 
tract or obligation itself. Thus legal 
tender is money that is legally tender- 
able in payment of debts, unless the 
contract calls for payment in some speci- 
fied kind of money, as, for example, 
"gold coin of the present standard of 
weight and fineness". A contract calling 
for the payment, for instance, of $10,000 
may be paid in any kind of money that 
is legal tender, unless the contract ex- 
pressly stipulates to the contrary. As an 
inspection of the analysis of money below 
will reveal, gold coins, silver dollars, 
United States notes, and gold certificates 
are legal tender, and such a contract is 
payable in any of these currencies. Con- 
tracts calling for payment in gold coin, 

[77] 



THE PAYING TELLER'S DEPARTMENT 

or silver dollars, or in any other kind of 
money, however, must be paid in the 
kind of money specified regardless of 
what may be legal tender. 

The variations in the legal tender qual- 
ities, the supporting security and re- 
deemability of the various kinds of 
United States money are sufficiently dif- 
ferent to warrant some study. For this 
reason an analysis of different kinds of 
United States money is presented. 

Gold Coins — The gold coins of the 
United States are legal tender in all pay- 
ments at their nominal value when not 
below the standard weight and limit of 
tolerance provided by law for a single 
piece, and, when reduced in weight below 
such standard and tolerance are a legal 
tender in valuation in proportion to their 
actual weight. Since gold coins are sub- 
ject to abrasion their weight is subject 
to reduction. The limit of tolerance on 

[78] 



THE PAYING TELLER'S DEPARTMENT 

double eagles ($20) and eagles ($10) is 
one-half grain on individual pieces; on 
smaller denominations of gold coins, the 
limit of tolerance on individual pieces is 
one-quarter grain (See Revised Statutes, 
section 3535). In England the limit of 
tolerance is three grains per sovereign. 

Loss of weight to this extent does not 
affect the legal tender quality of gold 
coins. Redemption is also provided for 
light weight gold coins within certain 
limits. The law is as follows: "Any gold 
coins of the United States, if reduced in 
weight by natural abrasion, not more 
than one-half of one per cent, below the 
standard weight prescribed by law, after 
a circulation of twenty years, as shown 
by the date of coinage, and at a ratable 
proportion for any period less than 
twenty years, shall be received at their 
nominal value by the United States 
Treasury and its officers, under such reg- 
ulations as the Secretary of the Treasury 

[79] 



THE PAYING TELLER'S DEPARTMENT 

may prescribe, for the protection of the 
Government against fraudulent abrasion 
or other practices. * * * Any gold coin 
in the Treasury of the United States 
when reduced in weight by natural abra- 
sion more than one-half of one per cent, 
below the standard weight prescribed by 
law, shall be recoined." 

Gold being the standard money, and 
its worth as coin depending upon its 
value as bullion, is not redeemable in 
any other form of currency. 

Standard Silver Dollars — Standard 
silver dollars are legal tender at their 
nominal value for all debts and dues, 
public and private, without regard to 
amount, except where otherwise ex- 
pressly stipulated in the contract. Stand- 
ard silver dollars are not redeemable in 
gold — the standard money — although by 
the Gold Standard Act of 1900 the dif- 
ferent kinds of money in circulation are 

[80] 



THE PAYING TELLER'S DEPARTMENT 

required to be kept on a parity with gold 
by the Treasurer of the United States. 

Subsidiary Silver Coins — The silver 
coins of the United States of smaller de- 
nominations than one dollar — 10. 25 and 
50 cent pieces — are legal tender in all 
forms not exceeding $10, in full payment 
of debts and dues, public and private. 
In larger amounts they are not legal ten- 
der. The purpose of this is to prevent a 
debtor from forcing light weight coins 
in large quantities upon a creditor. 

Subsidiary silver coins are redeemable 
in lawful money when presented to the 
United States Treasurer in sums or mul- 
tiples of $20 (See Appendix II). 

Minor Coins, Xickel and Copper — 
Minor coins are legal tender at their 
nominal value not exceeding the amount 
of 25 cents in any one payment. The 
purpose of limiting the legal tender value 
of these coins is the same as in the case 

[81] 



THE PAYING TELLER'S DEPARTMENT 

of subsidiary silver coins. For the prin- 
ciples underlying fractional currency — 
minor coins or token money, see Appen- 
dix II. 

Gold Certificates — Gold certificates 
are issued in denominations as follows: 
$10, $20, $50, $100, $500, $1000, $5000 
and $10,000. This issue is engraved with 
yellow backs, yellow seals being stamped 
on the obverse side. They are, in effect, 
warehouse receipts certifying that a gold 
dollar has been deposited in the United 
States Treasury for each dollar repre- 
sented by the certificate. They circulate 
in lieu of an equivalent amount of actual 
gold, in which metal they are redeemable. 
Gold certificates are, in other words, se- 
cured by a 100 per cent, gold reserve. 
They were not originally legal tender, 
but were made full legal tender by an 
Act of Congress, December 24, 1919. 

These certificates have largely disap- 

[82] 



THE PAYING TELLER'S DEPARTMENT 

peared from circulation in recent years. 
(Since they are now eligible to secure 
Federal Reserve NotesJ they are being 
held in large quantities by the Federal 
Reserve Banks as collateral therefor. 

Silver Certificates — Silver certifi- 
cates are issued in denominations as fol- 
lows: $1, $2, $5, $10, $20, $50, $100, 
$500 and $1000. This issue is engraved 
with green backs, being stamped with a 
blue seal on the obverse side. Like gold 
certificates they are, in effect, warehouse 
receipts certifying that a silver dollar has 
been deposited in the United States 
Treasury for each dollar represented by 
the certificate. They circulate in lieu of 
an equivalent amount of actual silver in 
which metal they are redeemable. Like- 
wise they may be regarded as being col- 
lateraled by a 100 per cent, silver reserve. 
They are not redeemable in gold and are 
not legal tender, but through the opera- 

[83] 



THE PAYING TELLER'S DEPARTMENT 

tion of the Gold Standard Act of 1900 
all forms of United States money are re- 
quired to be maintained on a parity, so 
that the question of their legal tender and 
acceptability at par does not arise. 

United States Notes, Also Known 
as "Legal Tenders" and "Green- 
racks" — These notes were created bv the 
Act of 1863. They are issued in denom- 
inations as follows: $1, $2, $5, $10, $20, 
$50, $100, $500, $1000 and $10,000, but 
mostly in small denominations. They were 
the first bills to be engraved with green 
backs and were formerly known as 
"greenbacks." This issue bears a red seal 
on the obverse side. (There are $346,681,016 
of these notes outstanding, against 
which the United States Treasury holds 
$150,000,000 in gold for their redemp- 
tion.^ There is consequently a gold re- 
serve of slightly more than 43 per cent., 
protecting these notes. They are re- 

[84] 



THE PAYING TELLER'S DEPARTMENT 

deemable by the United States Treasurer 
in gold and are legal tender except for 
duties on imports and interest on the 
public debt. 

Treasury Notes oe 1890 — Very few 
cf these notes are now outstanding be- 
cause they are retired as fast as received 
by the Treasury Department. Their re- 
tirement is supplanted by silver certifi- 
cates supported by silver coin previously 
purchased with the Treasury Notes. For 
practical purposes this form of currency 
may be disregarded. 

Federal Reserve Notes — Federal 
Reserve Notes are issued in denomina- 
tions as follows: $5, $10, $20, $50, $100, 
$500, $1000, $5000 and $10,000. The 
issue is engraved with green backs and 
bears a blue seal on the obverse side. The 
security behind Federal Reserve Notes 
may be of three kinds :(1) commercial 
paper rediscounted for member banks by 

[85] 



THE PAYING TELLER'S DEPARTMENT 

Federal Reserve Banks; (2) bankers' 
acceptances held by Federal Reserve 
Banks, and (3) gold or gold certificates. 
Whenever commercial paper or bankers' 
acceptances serve as collateral for Fed- 
eral Reserve notes, the collateral must at 
least equal at face value, the amount of 
the issue of Federal Reserve notes. In 
addition a 40 per cent, gold reserve is 
required. Whenever gold or gold cer- 
tificates along with commercial paper or 
bankers' acceptances serve as collateral 
for Federal Reserve notes, the gold or 
gold certificates also count as part of 
the 40 per cent, gold reserve required 
against these notes. 

Federal Reserve notes are marked by 
the serial number of the Federal Re- 
serve Bank of issue, and are redeemable 
in gold or lawful money at any Federal 
Reserve Bank or by the United States 
Treasurer. A redemption fund of at 
least 5 per cent, is required to be kept 

[86] 



THE PAYING TELLER'S DEPARTMENT 

by each Federal Reserve Bank for its 
notes outstanding at the United States 
Treasury, as a fund from which these 
notes may be redeemed if presented. 

Federal Reserve notes are a direct ob- 
ligation of the issuing Federal Reserve 
Bank and represent a first lien, equally 
with the Federal Reserve Bank notes de- 
scribed below, on the bank's assets. In 
addition they are a direct obligation of 
the United States Government. They 
are, therefore, fully secured by specific 
collateral, by the general assets of the 
Federal Reserve Bank of issue, and by 
the Federal Government. 

Federal Reserve notes are not legal 
tender, but are receivable by the Govern- 
ment for all public dues and on all ac- 
counts by all Federal Reserve Banks, 
National Banks and other banks mem- 
bers of the Federal Reserve System. 

Federal Reserve Bank Xotes — Fed- 
eral Reserve Bank notes are issued in 

[87] 



THE PAYING TELLER'S DEPARTMENT 

denominations as follows: $1, $2, $5, $10, 
$20, $50, $100, $500 and $1000. This 
issue is also engraved with green backs 
and bears a blue seal on the obverse side. 
Federal Reserve Bank notes are secured 
by the United States Government (pre- 
war) bonds equal to 100 per cent, of the 
amount issued, or by United States Cer- 
tificates of Indebtedness, or ( one-year 
gold notes J There is no legal limit on 
the amount of Federal Reserve Bank 
notes which a Federal Reserve Bank may 
issue. 

A redemption fund is required to be 
deposited with the United States Treas- 
iiry, from which these notes may be re- 
deemed if presented. This fund must be 
equal to five per cent, of the amount 
outstanding. They are also redeemable 
in gold or lawful money at the issuing 
bank. 

Federal Reserve Bank notes are not 
legal tender, but are receivable for all 

[ 88 ] 



THE PAYING TELLER'S DEPARTMENT 

public dues except duties on imports, 
and may be paid out by the Government 
for all purposes except interest on the 
public debt and for redemption of Fed- 
eral Reserve Bank notes. 

National Bank Xotes — Xational 
bank notes are issued in denominations 
as follows: $5, $10, $20, $50 and $100. 
They are secured by Government (pre- 
war) bonds only, and otherwise are iden- 
tical in all their attributes with Federal 
Reserve Bank notes. Xational banks 
may issue national bank notes up to the 
amount of their capital as a maximum. 
Under the Federal Reserve Act it is pre- 
sumed that the bonds now being held as 
Security against national bank notes will 
be purchased by the Federal Reserve 
Banks and that eventually the national 
bank notes will disappear from circula- 
tion. Xational banks are not required, 
however, to relinquish the circulation 
privilege. 

[89] 



THE PAYING TELLER'S DEPARTMENT 

As in the case of Federal Reserve 
Bank notes, a five per cent, redemption 
fund must be kept with the United 
States Treasury by the national bank of 
issue for their redemption if presented. 
The five per cent, redemption fund earns 
no interest and cannot be counted as a 
part of the bank's reserve against de- 
posits. These notes are redeemable in 
gold or lawful money with the United 
States Treasurer and at the bank of 
issue. They are not legal tender, but like 
Federal Reserve Bank notes are receiv- 
able for all public dues, except duties on 
imports, and may be paid out by the 
Government for all purposes except in- 
terest on the public debt and redemption 
of national bank notes. 

For the purpose of visualizing the dif- 
ferent kinds of United States money 
with their principal attributes, a chart 
showing the various kinds of United 
States money follows: 

[90] 



THE PAYING TELLER'S DEPARTMENT 







HOW 


THESE LEGAL TENDES 




KIND 


SECURITY 


REDEEMABLE 


REDEEMABLE QUALITIES 


DENOMINATIONS 


1. Gold Coin 




Hot Redeemable 


Full Legal 

Tender 


^>, 10, 20 


2. Silwer 




Sot redeemable 


1 Full Legal Ten- 




Dollar 






| der except when 
i otherwise ex- 
pressly stipu- 
lated in the 
contract 




5. Subsidiary 




In SUES or 


United For aEOunte not 




Silver 




multiplee of 


States exceeding $10 ir 




Coins 




$20 is. lawful 


Treasurer any one payment 




*. Minor 




In sums or 




Legal Tender up 




Nickel snd 




noil ti r les of 


States 


to 25 cents 




Copper Coir.a 




120 in lawful 


Treasurer 






5- U.S. Motes, 


Golc Reserve 


Golc 


United ! Legal Tender ex- 


1,2,9,10,20, 


"Legal 


equal to 




States . cept for duties 


5c, 10c, 500 


Tenders " or 


>*}■}% of 




Treasurer j on imports and 


ioco, 5000, 


'Greenback** 


issue 




interest on the 




1*6*} 






public debt 




6. Gold 


100* in Gold 


Gold 


UaitedStatee 


Full Legal 


10,20,50,10c 


Certificates 






Treasurer or 
any Federal 
Reserve Bank 


Tender 


500, 1000, 
5000, rfcooo 


7. Silver 


100% in 




UnitedStates Not Legal Ten- 


1. 2, 5, 10, 


Certificated! 


Silver 


Silver 


Treasurer or der, but receiv- 
any Federal able for all 
Reserve Sank taxes, customs 
and public dues 


20, 50, 100, 

5cc, 1000 


6. Federal 


100% in Com- 


Gpld or 


UnitedStates Not Legsl Ten- 


5, 10, 2C,=C 


Resenre 


mercial Paper, 


Lawful Money 


Treasurer or [der, but receiv- 


ice, 500, 


Botes 


Gold or Gold 




any Federal iable for all 


ioco, 5000 




Certificates, 




Reserve Bank taxes , cue tone 


10000 




in any propor- 




and public dues 






tion except 












that Gold Re- 












serve must 












equal kd% of 












issue 










9. Federal 


ICO* in U.S. 


Gold 


UnitedStates 


Not Legal Ten- 


•i 2, 5, MS. 


Reserve 


Government 




Treasurer or 


der. Receivable 


20, 50, IOO, 


Bank Note 


Bonds having 




any Federal 


for all Public 


500, 1C00 




circulating 




Reserve Bank Dues except du- 






privilege 




ties on imports 
| Cannot be used 

by 3ov ' t to 
jpay interest 

or to redeem 
! currency 




10. Rational 


Sane as Fed- 


Gold 


UnitedStates , Same as Federal 


5- 1°, 20, 


Bank Note 


eral Reserve 
Bank Note 




Treasurer or [Reserve Bank 
Na tiona IBank 1 Note 
of issue 


50, 100 



Chart Showing Various Kinds of United States 
Money 



[91] 



THE PAYING TELLER'S DEPARTMENT 

Separating Good or Usable Money from 
Mutilated and Worn 

From 30 per cent, to 40 per cent, of 
paper money received for deposit is so 
worn and mutilated as to be unfit for cir- 
culation. It is a bank's duty to redeem 
money unfit for circulation and to pay 
out, so far as possible, clean, crisp bills. 
Paying out clean bills is certain to create 
a feeling of good will among customers, 
and, therefore, can be regarded as hav- 
ing definite advertising value. 

The Treasury Department has kept a 
record of the average service life, in 
years, of different kinds and denomina- 
tions of paper currencies. These are re- 
produced in the following table: 



[92] 



THE PAYING TELLER'S DEPARTMENT 













National 








u. s. 


Gold Cer- 


Silver Cer- 


Bank 


Denomination 




Notes 


tificates 


tificates 


Notes 


One 


dollar . . 




1.61 




1.01 


« 


Two 


dollars . 




0.13 


. . . 


1.17 




Five 


dollars . 




5.45 




1.88 


5.38 


Ten 


Dollars . 
lty dollar 




3.58 
5.95 


5.35 
3.53 


3.35 
3.89 


5.31 


Twer 


s 


5.79 


Fifty c\ 




6.18 


3.93 


5.84 


3.36 


One* 


hundred i 


dollars . . . 


6.16 


4.16 


5.81 


3.76 


Five 


hundred 


dollars. . . 


3.79 


3.99 


1.89 


5.14 


One thousand dollars. . . 


4.51 


3.89 


1.45 


3.34 


Five 


thousand 


dollars. . 


.35 


5.75 






Ten 


thousand 


dollars. . 


.16 


1.77 






All denomin 


ations . . 


5.59 


5.81 


1.50 


2.48 



The greater longevity of the Govern- 
ment issues of the denominations of $10, 
$20, $50 and $100 is due to the fact that 
these notes were formerly held from year 
to year in bank reserves. 

Money counters should lay aside worn 
and mutilated bills for redemption. Torn 
or mutilated bills may be mended with 
transparent adhesive tape, but pins 
should not be allowed to remain in the 
bills. 

Xew kinds of money are procurable 
from the sources already enumerated* 

[93] 



THE PAYING TELLER'S DEPARTMENT 

Since the Sub-Treasuries throughout the 
country have been closed and the func- 
tions assumed by the Federal Reserve 
Banks, supplies of money may be had 
at the nearest Federal Reserve Bank, as 
well as, of course, at the United States 
Treasury in Washington. (All paper 
money is printed and reprinted at the 
Bureau of Engraving and Printing, 
Washington, D. C. Metallic coins are 
manufactured at the various United 
States mints.) 

Redemption of mutilated and worn 
money is best effected by the exchange 
of the uncurrent bills for new ones at the 
nearest Federal Reserve Bank. Where 
the Federal Reserve Bank is located in 
the same city this can be accomplished 
by direct delivery. Otherwise it is neces- 
sary to forward the currency by express 
— express and insurance charges being 
payable, as heretofore explained, by the 
Federal Reserve Bank. If the bank pre- 

[94] 



THE PAYING TELLER'S DEPARTMENT 

fers, instead of receiving new currency 
in return for the old, a credit may be 
placed to the bank's account upon the 
books of the Federal Reserve Bank. 

Mutilated and lightweight gold coins 
are not redeemable at face value if below 
the limit of tolerance. Lightweight 
silver and minor coins are redeemable at 
face value. 

Mutilated and torn paper currency is 
redeemable at the face value, provided 
three-fifths or more of the bill remains. 
For less than three-fifths, but for two- 
fifths and more, a piece of paper money 
is redeemable at one-half of face value. 
For less than two-fifths, a piece of paper 
currency is worthless. If the holder of 
any portion of a mutilated bill will fur- 
nish an affidavit certifying that the miss- 
ing portion has been destroyed, that piece 
of paper currency will be redeemed at 
face value. 

[95] 



THE PAYING TELLER'S DEPARTMENT 

Separating by Denominations 

After paper money is counted, and 
preparatory to storing it in the vault, it 
is strapped. All denominations are kept 
separate and strapped in separate pack- 
ages. In the table below the denomina- 
tions of the various kinds of paper money 
are exhibited. These are: $1, $2, $5, 
$10, $20, $50, $100, $500, $1,000, $5,000 
and $10,000. 

Packages are strapped containing one 
denomination and one kind of money 
only. A package consists, for instance, 
only of $1 silver certificates, $5 Federal 
Reserve notes, $10 United States Treas- 
ury notes, $20 Federal Reserve Bank 
notes, etc. Standard size packages are 
strapped as follows: 

$1 bills in packages of $50 and $100 

$2 bills in packages of $50, $100 and $200 

$5 bills in packages of $250 and $500 

$10 bills in packages of $500 and $1000 

[96] 



THE PAYING TELLER'S DEPARTMENT 



$20 bills in packages of $500, $1000 and 

$2000. 

$50 bills in packages of $2500 and $5000 

$100 bills in packages of $5000 and $10000 

$500 bills in packages of $50000 (or accord- 
ing to order) 

$1000 bills in packages of $50000 and $100000 
(or according to order) 

$5000 (according to order) 

$10000 (according to order) 

New coins may be ordered from the 
Federal Reserve Banks. They are then 
taken to the automatic coin counting 1 and 
wrapping machine where they are count- 
ed and rolled up in packages for payroll 
and counter use. The machine wraps 
them in "cartridge" rolls as follows: 

$.50 coins are wrapped in rolls of $10.00 
.25 coins are wrapped in rolls of 10.00 
.10 coins are wrapped in rolls of 5.00 
.05 coins are wrapped in rolls of 2.00 
.01 coins are wrapped in rolls of .50 



[97] 



THE PAYING TELLER'S DEPARTMENT 

Detecting Counterfeit Currency and 
liaised Bills 

A very important part of the work of 
the money counter while counting and 
verifying currency is to be on the look- 
out for counterfeit and raised bills. 
Counterfeits are not easily detected by 
the visual process. They are more easily 
"caught" by the feeling of the weight 
and texture than by the appearance. The 
paper furnishing the basis for paper cur- 
rency is made by a secret process and is 
difficult to imitate. Generally the qual- 
ity of counterfeit paper is inferior to the 
paper used by the Government, and red 
and blue ink lines are used to imitate 
the red and blue silk threads in the gen- 
uine bills. 

It will be some advantage for the 
money counter to understand the techni- 
cal processes used by counterfeiters in 
making bills and coins because he will 
know better what to look for. There 

[98] 



THE PAYING TELLER'S DEPARTMENT 

are three principal methods of making 
counterfeit bills. The first is copying 
bills by hand, reproducing each finest line 
and imitating the silk thread in the paper 
of the genuine issue with delicate pen 
and ink work. Such work is performed 
only by experts — probably those who 
have formerly been engaged in the Bu- 
reau of Engraving and Printing. Some 
of these notes have been so skilfully imi- 
tated as to deceive the naked eye of ex- 
perts. 

The second method is to engrave a 
steel plate from which the counterfeit 
bills are printed. This process is more 
remunerative than the first because many 
bills can be reproduced from the same 
plate. 

The third and most usual process is 
that of photographic reproduction. The 
photo-engraving process bills are not as 
accurate as the steel engraved bills and 
are the easiest of all to detect. The en- 

[99] 



THE PAYING TELLER'S DEPARTMENT 

graving is apt to be less distinct and of 
lighter color than in "the genuine, for the 
reason that the plates are made from 
photographs of the original and some- 
thing is lost in the process. 

There are two principal methods of 
making counterfeit coins. The first is 
casting from a mold ; the second is stamp- 
ing with a die and press. In the casting 
process a mold is made from a new and 
genuine coin. In the stamping process a 
die must be made and the counterfeit 
money is struck off with sharp blows of 
a heavy press. The stamping process 
produces better results because the im- 
pression is more clearly cut, this, in fact, 
being the method used in making gen- 
uine coins. 

No exact formulas can be given for 
the detection of counterfeits. Judgment, 
experience, knowledge of counterfeiters' 
technical processes, and familiarity in 
handling currency are the best guides. 

[100] 



THE PAYING TELLER'S DEPARTMENT 

Supplementing the guides suggested, the 
most competent assistance available in 
discovering counterfeits is the alarm 
spread by the periodical entitled, "The 
Counterfeit Detector," which describes 
each counterfeit issue that comes to the 
attention of the United States Secret 
Service Department. Two sources of in- 
formation are the cooperative bank or- 
ganizations and the Government secret 
service agents. Whenever counterfeits 
are discovered they are charged back to 
the account of the presenting customer 
and the Secret Service Department of 
the Government is notified. 

Counterfeit bills are not as persistent 
in their recurrence as raised bills. Bills 
may be raised in several ways. The large 
figures on the corners of the larger de- 
nominations may be cut off and pasted 
over the figures in each of the corners of 
smaller denominations. Another method 
is to bleach out by acid the figures on 

[101] 



THE PAYING TELLER'S DEPARTMENT 

small denominations and skilfully insert 
higher ones with waterproof ink. 

Raised bills can be readily detected by 
knowledge of the engraved portraits 
which the various genuine bills carry. 
Each denomination of different kinds of 
money carries a given engraved portrait. 
The engraved portraits appearing on 
each denomination of the various kinds 
of paper money are exhibited in a chart 
— Appendix III. Money counters should 
thoroughly master these denominational 
portraits in order to "catch" raised bills. 

As this volume goes to press the 
Treasury Department has under consid- 
eration the revision and improvement of 
currency designs. The purpose in view 
is to insure the highest possible degree 
of protection against note-raising and to 
secure economy in printing. It is ex- 
pected that the Secretary of the Treasury 
will soon prescribe that future re-issues 
of all kinds of United States paper 

[102] 



THE PAYING TELLER'S DEPARTMENT 

money bear the same denominational por- 
traits which now appear on the Federal 
Reserve notes and Federal Reserve Bank 
notes. 

It is to be presumed that changes will 
be made gradually and in the course of 
regular business and that no attempt 
will be made to discontinue old issues 
until their replacement becomes neces- 
sary by being sent to Washington for 
re-issue when they have become unfit for 
circulation. 

When this regulation becomes effective 
the portraits of Washington will appear 
upon all $1 bills; Jefferson on $2; Lin- 
coln on $5; Jackson on $10; Cleveland 
on $20; Grant on $50; Franklin on 
$100; Marshall on $500; Hamilton on 
$1,000; Madison on $5,000 and Chase on 
$10,000. Such a standardization of por- 
traits will certainly be a boon to paying 
tellers and money counters by making 

[103] 



THE PAYING TELLER'S DEPARTMENT 

the process of detecting raised notes very 
much simpler. 

Verifying the Count 

Packages of paper and metallic cur- 
rency are received from customers and 
out-of-town correspondents by mail and 
express and over the counter, and are 
credited to the customer's account sub- 
ject to verification, with the understand- 
ing that in case the amount of the de- 
posit slip is incorrect, the credit will be 
adjusted. Bundles of paper money are 
distributed to the various money counters 
by the head of the department. Each 
bundle will contain a number of pack- 
ages, the amounts of which are printed 
on the outside of the wrapper. The ini- 
tials of the clerk of the institution from 
which they came also appear upon the 
wrapper. The money counter should 
make a list of the bundles charged to 
him. The packages are opened and bills 

[ 104 ] 



THE PAYING TELLER'S DEPARTMENT 

are counted, sorted and examined for 
counterfeits and raised bills. If any dis- 
crepancy arises in the count, the package 
is counted by another person, and after 
being verified by two parties the atten- 
tion of the head of the department is 
directed to the discrepancy, whether over 
or short. The wrapper in all cases is ini- 
tialed by the persons who have verified 
the count. 

Currency is counted by units, i. e., by 
number of bills and not according to de- 
nomination. . For instance, if a package 
contains 30 fives, lo tens and 10 twenties, 
a five — the lowest denomination — is 
taken as a unit. One ten is considered as 
two rives, and a twenty as four. Thus 
the above package should contain 100 
units, or 8,500. 

After the money has been counted, 
proved, strapped in packages, and ini- 
tialed, the packages are turned over to 
the head of the money section. 

[ 105] 



THE PAYING TELLER'S DEPARTMENT 

Money Section Proof 

At the beginning of business the head 
of the money section enters in the money 
section proof the amount of the odd — 
various, good — various, and held in vault, 
each of which were placed in the vault 
the night before. To this are added the 
amounts charged the paying- teller from 
the various departments of the bank re- 
ceiving and turning over cash during the 
day. Cash is routed to the paying teller 
from other departments, usually with 
some kind of interdepartmerit total slip 
and the amount is signed for by the per- 
son receiving it. 

At different times during the day the 
paying teller and assistant paying tellers 
may require additional amounts of cur- 
rency to be used as counter or till money, 
and requisition the desired amount from 
the head of the money section. Sums 
relinquished to the paying tellers are 

[ 106 ] 



THE PAYING TELLER'S DEPARTMENT 

charged to them in the money section 
proof. 

It is obvious that the money section 
should have on hand at the close of the 
day's business an amount equal to what 
it started the day with, plus receipts of 
cash from other departments, window 
deposits, and currency shipments inward 
by mail and express, less the amounts 
charged over to the various paying tell- 
ers. On the reverse of the money sec- 
tion proof is charged the amount of cash 
given to each of the money counters for 
separation by kinds and denominations, 
and for inspection and verification. At the 
end of the day when these amounts are 
turned in, they are credited to the appro- 
priate money counter. The total amounts 
are entered at the bottom of the proof 
which should agree with the sum derived 
by subtracting amounts charged to paying 
tellers from the total on hand in the 

[107] 



THE PAYING TELLER'S DEPARTMENT 

morning, plus receipts from internal and 
external sources. 

A record of "overs" and "shorts" 
should be kept by the head of the money 
section, showing the names of the de- 
positors or correspondents whose cash 
deposits are in error, the date of such de- 
posit, and the name of the money counter 
detecting the discrepancy. Claims are 
made against customers for the amount 
of any shortage or for counterfeits. 
Credits are allowed for "overs". 

Shipping Currency 

Another important function of the 
paying teller's department, especially in 
a metropolitan city bank, is to keep cor- 
respondent banks supplied with suitable 
kinds and denominations of coin and cur- 
rency upon their order. The paying 
teller is also requested to ship currency 
to banks not correspondents at the order 
of correspondent banks, received by mail 

[108] 



THE PAYING TELLER'S DEPARTMENT 

and telegraph, or long distance tele- 
phone. Such orders are executed only 
upon proper authorization, and when 
sufficient funds are on hand to meet the 
amount ordered. 

Currency shipments may be classified 
under five groups: 

1. Currency orders. 

2. Coin orders. 

3. Gold bar orders. 

4. 5 per cent, redemption fund orders. 

5. Transfer of funds orders. 

These orders are the same in nature, 
but differ as to the kind of money de- 
sired, or the method by which payment 
is effected. Currency and coin orders 
call for shipments of currency and coin, 
the kinds and denominations desired 
being specified. 

Gold bars are purchased from the 
nearest United States Assay Office be- 
cause they are not regularly kept as part 

[109] 



THE PAYING TELLER'S DEPARTMENT 

of. the money stock of a bank. They are 
purchased by banks for resale to manu- 
facturing jewelers, dental manufacturers, 
and others using gold in the arts. Gold 
bars vary slightly in weight and fineness 
and must be tested for such. No less 
than $5,000 worth can be purchased from 
an Assay Office. Smaller quantities 
must be purchased from brokers at pre- 
miums varying according to weight and 
fineness. 

Five per cent, redemption fund orders 
are orders usually received from corre- 
spondent banks to remit funds to the 
United States Treasury at Washington 
to make good a deficit arising in the 5 
per cent, redemption fund required for 
redeeming outstanding national bank 
note circulation. All kinds of money are 
eligible for this purpose except National 
bank notes. 

In a transfer of funds, currency is 
shipped to a third bank for which the re- 

[110] 



THE PAYING TELLER'S DEPARTMENT 

mitting bank receives reimbursement by 
charging the account of the correspon- 
dent bank. 

Currency shipment orders are vari- 
ously administered, depending upon the 
size of the bank. In the larger banks 
such orders are routed to the Chief Clerk, 
and before the money is forwarded the 
letter must pass through the following 
routine : 

1. The chief clerk attaches a form (shown be- 
low) to the letter, which authorizes the paying 
teller to ship currency as per instructions after 
the proper signatures approving the shipment have 
been affixed to the form. 

THE BANK 

New York, 

TO PAYING TELLER: 

This day at M., we received instructions 

from of 



to ship to 

[in] 



THE PAYING TELLER'S DEPARTMENT 

currency (or coin) by (express — registered 

mail) as follows : 

..., % t^ ..„.,.. 

The account on our books is in available funds 
for the above amount. 



Ledger Clerk. Chief Clerk. 

In accordance with the above request you are 

instructed to make the shipment described and 

charge the amount thereof to the bank (banker or 

other depositor) above named 

Cashier 
Shipment has been made 

(Count and seals duly witnessed by) ......... . 

Paying Teller 

Charged on debit ticket 

Consignee advised 

Charge compared with express 

receipts and verified 

2. If no remittance accompanies the letter and 
the correspondent bank asks to have its account 
charged, the order is routed to the ledger elerk 
handling the account, who must initial it to signify 
approval if the account is in funds to meet the 

[112] 



THE PAYING TELLER'S DEPARTMENT 

amount required. The form is then signed by the 
ehief clerk. 

3. The form is then approved and initialed by 
the cashier or an assistant cashier. 

4. The form is approved and initialed by -the 
paying teller and the order is given to the money 
shipping section for filling. 

5. When the money has been packed, sealed 
and ready for shipment, the form is approved and 
initialed by the shipping clerk and by a special 
officer, who delivers the package to the express 
company or postoffice, as a witness. 

6. When reimbursement is received by charging 
the account of the correspondent bank, a charge 
ticket debiting such account is made out and ini- 
tialed by the settlement clerk. 

Shipments may be made either by ex- 
press or registered mail, the most eco- 
nomical method being selected by the 
shipping clerk. Owing to the fact that 
the amount of recovery upon lost reg- 
istered mail packages is fixed at a maxi- 
mum of $50, when amounts in excess of 
$50 are shipped by registered mail, it is 

[113] 



THE PAYING TELLER'S DEPARTMENT 

necessary to procure additional insurance 
from one of the various insurance com- 
panies which underwrite such risks. All 
shipments by registered mail should be 
entered in an "Outgoing Insured Reg- 
istered Mail" book containing the follow 7 - 
ing information: Addressee, sender, 
amount, postage, insurance, and total 
amount charged to the account affected. 

Shipments by express should be en- 
tered in an "Express Shipments Out- 
ward" book containing the following in- 
formation: Date, value, consignee, des- 
tination, signature of express clerk receiv- 
ing package, initial of shipping clerk 
delivering package, initial of person wit- 
nessing delivery to express agent, and 
initial of chief clerk. Express shipments 
are usually sent C. O. D. 

Advice - of shipment of currency should 
always be sent by mail in order to ap- 
prise the consignee of the shipment. 

[114] 



THE PAYING TELLER'S DEPARTMENT 

Settling Clearing House Balances 

In most banks the paying teller is 
called upon to settle clearing house bal- 
ances. In those cities in which Federal 
Reserve banks or branches are located, 
clearing house balances are settled with- 
out involving the transfer of a single 
dollar of cash. Inasmuch as Federal 
Reserve banks are members of the local 
clearing house association, settlements 
are made through adjustments in the 
clearing house members' accounts as they 
appear upon the ledger of the local Fed- 
eral Reserve bank. 

In most cities, however, clearing house 
balances are settled by means of cash, 
clearing house certificates, New York 
bank drafts, etc. Usually the clearing 
house rules provide for a settlement of 
balances before one o'clock. Banks hav- 
ing debit balances must provide the 
clearing house with funds by that time. 
Banks with credit balances can receive 

[115] 



THE PAYING TELLER'S DEPARTMENT 

amounts owing to them from the clearing 
house at one o'clock. 

It is the duty of the paying teller to 
prepare the cash for delivery to the 
clearing house when debit balances oc- 
cur, and to receive cash from the clearing 
house in case of credit balances. 

The Bank's Payroll 

A bank's payroll is usually divided in 
two parts — one for officers and one for 
employees. The preparation of the pay- 
roll cash is usually made under the di- 
rection of the paying teller, and the offi- 
cers' payroll is usually exclusively con- 
fided to him. 

A record of the employees' salaries 
should be kept in a payroll book con- 
taining an alphabetical list of the em- 
ployees' names. In the larger banks the 
payroll clerk acts under the supervision 
of the chief clerk and paying teller, and 
in co-operation with the employment de- 

[116] 



THE PAYING TELLER'S DEPARTMENT 

partment. The rate of salary for each 
employee, or changes in rates, are auth- 
orized by the chief clerk who routes the 
authority for salary payments and in- 
creases to the payroll clerk on a form 
which the payroll clerk retains as a per- 
manent part of his record. Perhaps the 
most satisfactory payroll book is one 
which is ruled with as many vertical col- 
umns as represent the number of salary 
distributions during the year — 52, if sal- 
aries are paid once a week. The amount 
of salaries for each week is entered in the 
column opposite the name of the em- 
ployee. 

Xew employees are ordinarily called 
'entrances" or "ins". Resigning em- 
ployees are "exits" or "outs". Upon the 
engagement of a new employee a mem- 
orandum is sent to the payroll clerk from 
the chief clerk or employment officer 
stating the person's name, date of en- 

[117] 



THE PAYING TELLER'S DEPARTMENT 

trance, and weekly salary. With this 
memorandum as a basis of his computa- 
tions, the payroll clerk enters the name of 
the person in the payroll book at the bot- 
tom of the alphabetical group to which 
the name belongs, the weekly rate in the 
first column, and the amount of wages 
for the week (on a pro rata basis if the 
employee did not begin on Monday), in 
the appropriate column. Whenever an 
employee leaves, a memorandum contain- 
ing the information is routed to the pay- 
roll clerk from the chief clerk, giving the 
employee's name and date. This inform- 
ation is placed in the column affecting 
the resigning employee, and the salary 
for the week is made up accordingly. In 
case notice of an "exit" does not reach 
the payroll clerk until after the payroll 
is prepared, the proper amount of cash 
is extracted from the envelope and a 
credit ticket passed to credit the payroll 
account for the over- withdrawal of cash. 

[118] 



THE PAYING TELLER'S DEPARTMENT 

Before the money for the weekly pay- 
roll is placed in salary envelopes, it is 
essential to derive a proof of the total 
amount. Provided the number of em- 
ployees and their rates of salary do not 
change, no proof is necessary inasmuch 
as the total payroll must be the same each 
consecutive week. Whenever there are 
"entrances" and "exits", or salary 
changes during the week, each payroll 
must be verified by reconciliation with 
the previous week's payroll. If there 
have been more "entrances" than "exits" 
for the week, or increases in salaries with- 
out change in the number of employees, 
the new payroll will show an increase in 
amount. To illustrate: Suppose the pay- 
roll for the week ending January 7th is 
$20,000. During the week there may 
have been ten "entrances", the combined 
salary of which is $2o0. Increases in 
salary amount to $100. There have been 
five "exits", representing a payroll de- 

[119] 



THE PAYING TELLERS DEPARTMENT 

crease of $150. Therefore, if the new 
payroll is correct, it should be $20,000, — 
the old payroll, plus the salaries of the 
"entrances", — $250, plus the salary in- 
creases, — $100, minus the salary of the 
"exits", — $150, leaving a net balance of 
$20,200. 

Having determined that the payroll 
should be $20,200 for the week, it is then 
necessary to determine whether or not the 
footing of the payroll book equals the 
required amount. When the proof is 
obtained, an order is passed, signed by 
the chief clerk, and the amount of money 
necessary for the payroll delivered to the 
payroll clerk by the paying teller. 

The record of increases in salaries 
should be maintained as a part of the 
payroll clerk's records and a memoran- 
dum sent to the employment department 
for its records. A memorandum is also 
sent to the employment department to 

[120] 



THE PAYING TELLERS DEPARTMENT 

indicate transfers of employees from one 
department to another. 

The Petty Cashier 

To provide for small expenses which 
must be paid in immediate cash, in the 
larger banks a convenient sized fund is 
placed in charge of a petty cashier. If a 
special petty cashier is not appointed 
some means must be provided for paying 
petty expenses and this duty devolves 
upon the paying teller and his assistants. 

Vouchers for petty cash expenditures 
should be signed by department heads, 
the chief clerk, and countersigned by an 
officer before they are eligible to be 
cashed by the paying teller. To convey 
some idea of what expenses must be met 
in this manner the following list is given: 

1. Carfare. 

2. Telegrams. 

3. Postage due. 

[121] 



THE PAYING TELLERS DEPARTMENT 

4. Taxicab hire. 

5. Stationery. 

6. Suppers and lunches. 

7. Insurance on money and security 
shipments. 

8. Miscellaneous. 

When properly signed, paying teller's 
cash expense slips are stamped with the 
paying teller's "paid" stamp, and entered 
on the paying teller's records and held as 
part of the cash until charged out. Peri- 
odically all expense slips should be re- 
capitulated by petty expense accounts 
and charged to the general ledger ex- 
pense account. The auditing department 
should audit petty expense vouchers. 

The Paying Teller's Reports 

On account of the necessity of keeping 
a legal cash reserve and so that adequate 
funds may be on hand to meet both 
ordinary and extraordinary contingen- 

[122] 



THE PAYING TELLER'S DEPARTMENT 

cies, the paying teller is usually asked to 
prepare certain reports for the informa- 
tion of the bank's officers. In the first 
place, a report showing the amount of 
each kind of money and total held by 
the paying teller is sent to the general 
bookkeeper, against which the general 
bookkeeper's cash figures may be proved 
and reconciled. 

A weekly report is also visually sub- 
mitted to some officer whose function it 
is to control reserves, to show the fol- 
lowing : 

1. Amounts of money analyzed according to 
denominations held by the paying teller. 

2. Amount of currency received since last re- 
port. 

3. Amount of currency on hand. 

a. Counted. 

b. Uncounted. 

c. Amount of currency shipped to corre- 
spondents since last report. 

4. Amount of mutilated currency forwarded to 

[123] 



THE PAYING TELLER'S DEPARTMENT 

the Federal Reserve Bank or the United States 
Treasury for redemption. 

5. Denominations and amount of new currency 
received. 

Whenever a Comptroller's call is is- 
sued (five times a year) the paying teller 
must prepare a report to show the 
amount of each kind of currency held in 
the bank's vault. This is submitted as a 
part of the report to the Comptroller of 
the Currency. 

Department Proof to General Book- 
keeper 

The daily proof of the paying teller is 
sent at the close of each day's business to 
the general bookkeeper. 

Credits in the paying teller's proof 
are credits (1) to those departments of 
the bank which have received cash during 
the day and have delivered it with inter- 
department total slips to the paying tel- 
ler and (2) to bank correspondents which 

[124] 



THE PAYING TELLER'S DEPARTMENT 

have shipped currency inward. Separate 
columns are provided upon the right side 
of the department proof for crediting 
such departments as remit cash and cus- 
tomers that forward currency by reg- 
istered mail or express. These amounts 
are entered upon the department proof 
by the settlement clerk after the cash has 
been verified by one of the money count- 
ers. 

The debits on the paying teller's proof 
are of three different types: 

1. Checks and coupons. 

a. Home debits. 

b. Clearing bouse checks. 

c. Out-of-town checks. 

d. Messengers' checks. 

e. Matured coupons. 

2. Debit tickets. 

a. To correspondents' accounts, arising from 
coin, currency, and gold bar shipments or 
transfer of funds orders, and to include post- 
age, insurance charges and any shortages in 
receipts of currency. 

[125] 



THE PAYING TELLER'S DEPARTMENT 

. Cash. 

a. Actual cash held in bank's vault and charged 
to the paying teller. 

b. Cash items — items held as cash waiting dispo- 
sition, such as checks and matured coupons 
held on books received too late to charge tG 
the appropriate department, and expense 
slips previously cashed and waiting to be 
charged to the general ledger expense ac- 
count. 



[ 126 ] 



APPEXDICES 



APPENDIX I 
Digest of Court Decisions Showing Liability 
of Bank to Drawer for Certain Irregu- 
larities in Certified, Altered, Forged, 
Postdated and Stopped Checks. 

On account of the conflicts in decisions of vari- 
ous courts in causes of action concernng liability 
in the cases above enumerated, a few digests of 
decisions are printed below. Those are taken from 
the Banking Law Journal Digest. 

Certified Checks 

Certification is equivalent to acceptance. Mer- 
chants' Bank v. State Bank. 10 Wall (U. S.) 604. 
26 B. L. J. 181. 

Where a bank certifies a check for its depositor 
and the latter delivers the check to his creditor, 
the deliver}' of the check is in legal effect a pay- 
ment by the depositor to creditor of so much 
money. The bank becomes bound to pay the 

[ 127 1 



APPENDIX 

holder of the check and cannot thereafter withhold 
payment and interplead the depositor. Herrmann 
Furniture and Plumbers' Cabinet Works v. Ger- 
man Exchange Bank, 87 N. Y. Supp. 462, 21 B. 
L. J. 392. 

Certification at the instance of the holder re- 
leases the drawer and indorsers. Merchants' Bank 
v. State Bank, 10 Wall (U. S.) 604. 27 B. L. 
J. 72. 

Where a holder of a check has it certified the 
drawer is thereby released from liability. First 
Nat. Bank v. Leach, 52 N. Y. 350. 26 B. L. J. 
J 82; 27 B. L. J. 72. 

The certification of a check at the request of the 
holder operates to discharge the drawer. After a 
bank has so certified a check it cannot avoid lia- 
bility to the holder by showing that the check was 
obtained by false pretenses. Times Square Auto- 
mobile Co. v. Rutherford Nat. Bank, 77 N. J. 
Law 649, 73 Atl. Rep. 479. 26 B. L. J. 678. 

Certification of a check at the instance of the 
holder releases the indorsers, though the drawer 
has no funds on deposit and the bank is insolvent. 
First Nat. Bank v. Currie, 147 Mich. 72, 110 N, W. 
Rep. 499. 24 B. L. J. 191. 

Where a drawer of a check has it certified before 
delivery, though he acts at the request of the payee, 
the drawer remains liable on the check. Randolph 

[ 128 ] 



APPENDIX 

Xat. Bank v. Hornblower, 160 Mass. 401. 26 B. 
L. J. 183. 

Where a bank certifies a check at the instance 
of the drawee, the drawer is not thereby released 
from liability. Cullinan v. Union Surety Co., 79 
X. Y. App. Div. 409. 20 B. L. J. 177. 

Stopping Payment of Certified Chech 

Payment of a certified check cannot be stopped. 
Herrmann Furniture Works v. German Exchange 
Bank, 87 X. Y. Supp. 462. 21 B. L. J. 392: 22 
B. L. J. 411. 

The certification of a check by the drawee bank 
terminates the drawer's right to stop payment. 
Xational Commercial Bank v. Miller, 77 Ala. 168. 
32 B. L. J. 707. 

A drawer cannot stop payment of a certified 
check. This decision intimates that where a check 
is certified at the holder's request before delivery, 
payment may be stopped in a proper case. Times 
Square Automobile Co. v. Rutherford Xational 
Bank, 77 X. J. Law 649, 73 Atl. Rep. 479. 33 
B. L. J. 765. 

The fact that the drawer discovers that the 
payee is insolvent does not authorize the drawer 
to stop payment, after the check has been cer tilled, 
in order to apply the amount to a debt owing to 
the drawer from the payee. Carnegie Trust Com- 

[129] 



APPENDIX 

panv v. First National Bank, 213 N. Y. 301, 107 
N. E. 693. 33 B. L. J. 471. 

Altered Checks 

Where a bank pays a raised check it is liable to 
the depositor for the excess paid. Clark v. Na- 
tional Shoe and Leather Bank, 32 N. Y. App. Div. 
316. 28 B. L. J. 171. 

Bank paying raised check is entitled to recover 
the money from the innocent holder to whom the 
money was paid. Redington v. Woods, 45 Cal. 
406 ; Oppenheim v. West Side Bank, 22 Misc. Rep. 
^N. Y.) 722. 25 B. L. J. 280. 

A check on the A Bank was raised from $8 to 
$1,800 and indorsed to the B Bank for collection. 
The B Bank endorsed it for collection and turned 
the proceeds over to the party from whom it re- 
ceived it. Held that the B Bank was not liable to 
the collecting bank. National Park Bank v. Sea- 
board Bank, 114 N. Y. 28, but the A Bank could 
recover from the B Bank, National Park Bank v. 
Eldred Bank, 90 Hun (N. Y.) 285. 25 B. L. J. 
279. 

Where a bank pays a check which has beem 
fraudulently raised it cannot charge the amount 
of the check aganst the drawer's account. First 
National Bank v. Ketchum, Okla., 172 Pac. Rep. 
81. 35 B. L. J. 399. 

[130] 



APPENDIX 

In some cases where a raised check is paid, the 
bank is allowed to charge the original amount of 
the check against the drawer's account. Clark v. 
National Shoe and Leather Bank, 32 N. Y. App. 
Div. 316; In re Beer, 124 N. Y. Supp. 423. 28 
B. L. J. 171; 31 B. L. J. 327. 

Forged Checks 

A bank which pays a check upon a forgery of 
its depositor's signature cannot charge the amount 
against the account of the depositor. Maurmair 
v. National Bank of Commerce, Okla., 165 Pac, 
Rep. 413. 34 B. L. J. 627. 

A bank w T ith which a person has a deposit as- 
sumes responsibility for the erroneous payment of 
any check not drawn or authorized by the deposi* 
tor. Bank of Brunswick v. Thompson, N. Car., 
93 S. E. Rep. 849. 34 B. L. J. 879. 

A bank which pays a check on which the de- 
positor's signature is forged cannot charge the 
amount against his account. Harter v. Mechanics' 
National Bank, 63 N. J. L. 578, 44 Atl. Rep. 715; 
Hardy v. Chesapeake Bank, 51 Md. 562; Georgia 
Railroad and Banking Co. v. Love & Goodwill So- 
ciety, 85 Ga. 293, 11 S. E. Rep. 616. 31 B. L. J. 
545. 

The mere possession of a depositor of a rubber 
stamp, which will make a facsimile of his signa- 

[131] 



APPENDIX 

ture, will not absolve the bank from liability for 
the amount paid on checks, forged by one who 
unlawfully obtained possession of the stamp and 
made use of it in forging the depositor's signature. 
Bobb v. Pennsylvania Co., 186 Pa. St. 456, 40 Atl. 
Rep. 969. 14 B. L. J. 275. 

A bank which pays a check bearing a forged 
signature, is liable to the depositor though the 
latter fails to notify the bank of the fact that sev- 
eral bank checks were missing from his check 
book. Leff v. Security Bank, 157 N. Y. Supp. 92. 
83 B. L. J. 204. 

A bank which paid out money on a check pur- 
porting to be signed by a depositor, but the sig- 
nature on which was in fact forged by his clerk 
without authorrty, was held not exempt from lia- 
bility to the depositor, by proof that the forgery 
was committed on a blank form taken from tne 
depositor's check-book which was left lying about 
his office during the day. Mackintosh v. Eliot Na- 
tional Bank, 123 Mass. 393. 1 B. L. J. 330; 31 B. 
L. J. 547. 

Where a bank, without consideration, received 
a sum of money from A, to be paid out on the 
check of B, and the money is paid out on a check 
bearing a forgery of B's signature, the bank is 
not liable to A. The usual rule did not apply here 
for the reason that the ordinary relation of banker 

[132] 



APPENDIX 

and depositor did not exist. People's National 
Bank v. Wheeler, 21 Okla. 387, 96 Pac. Rep. 619. 
25 B. L. J. 758; 31 B. L. J. 548. 

A drawee bank is bound to know the signature 
of its depositor. If it pays a check bearing a 
forgery of a depositor's signature it is not per- 
mitted to recover the money from one who re- 
ceived it in good faith. 

Postdated Checks 

When a check is issued postdated, it contains all 
the elements of a contract, but payment upon it 
can only be demanded upon the day of its date, or 
some day succeeding that time. Frazier v. Trow, 
etc., Co., 24 Hun (N. Y.) 281. 21 B. L. J. 153. 

A postdated check should not be paid by the 
bank on which it is drawn until the time of its 
date arrives, nor should funds be set aside for 
its payment. If by reason of such payment, or 
setting aside of funds, other checks are dishonored, 
the bank is subject to an action for damages. Smith 
v. Maddox-Rucker Banking Co., 8 Ga. App. 288. 
6S S. E. Rep. 1092. 27 B. L. X 1057. 

Stop-Payment Checks 

A bank is liable for a failure through oversight 
to execute an order to stop payment, though a 
clause in the pass book provides that the bank 

[133] 



APPENDIX 

shall not be liable in such a case. Elder v. Frank- 
lin National Bank, 25 Misc. Rep. (N. Y.) 716. 
55 N. Y. Supp. 576. 18 B. L. J. 386; 29 B. L. J. 
180. 

When a drawer of a check notifies the bank not 
to pay it, but notwithstanding such notice, the bank 
makes payment, and it does not appear that the 
check had been negotiated by the payee, and was 
paid to an indorsee for value without notice, such 
payment by the bank, after countermand, is un- 
authorized, and it will be liable for the money to 
the drawer. Pease & Dwyer Co. v. State National 
Bank, 114 Tenn. 69a, 88 S. W. 172. 22 B. L. J. 
862. 

A bank which pays a stopped check by mistake 
has no right of recovery against the payee. Na- 
tional Bank of New Jersey v. Berrall, 70 N. J. 
Law 757, 58 Atl. Rep. 189. 21 B. L. J. 536. 

Where a check endorsed in blank was lost and 
was accepted by a merchant from a stranger in 
payment for goods and afterwards paid by the 
drawee bank, it was held that the merchant being 
a holder in due course, the bank was not liable to 
the drawer, even though payment has been stopped. 
Unaka National Bank v. Butler, 113 Tenn. 574, 
83 S. W. Rep. 655. 22 B. L. J. 692. 

Notice to stop payment on a check, even though 
not a notice binding on the bank is sufficient to 
place a bank on inquiry as to the equities against 

[134] 



APPENDIX 

the check in the hands of the holder, and the bank 
should not honor the check without making such 
inquiries as ordinary prudence would dictate. Pub- 
lic Grain & Stock Exchange v. Kune. 20 111. App. 
J37. 21 B. L. J. 135. 



APPENDIX II 

Purposes of and Principles Underlying Sub- 
sidiary or Fractional Coins 

Fractional silver coins and minor coins (nickels 
and coppers) — also known as token money — have 
characteristics peculiar to themselves. Unlike 
standard money they are limited in their legal ten- 
der qualities, redeemability, and intrinsic value. 
These characteristics are outlined below: 

1. Issued in small denominations. Subsidiary 
money is primarily a tool for "making change ". 

2. Made of baser metal than the standard coin 
— of silver, nickel and copper. This is necessary 
because a coin of small denomination if made of . 
gold would be too small for convenience in hand- 
ling. 

3. Shortness in weight. Subsidiary coins do 
not have the intrinsic value called for by their 
nominal value. They are worth more as coins or 

[ 13.5 ] 



APPENDIX 

purchasing power than as metal or bullion. The 
purpose of this provision is to prevent subsidiary 
coins from being melted, thus insuring their per- 
manence in circulation. It also prevents them 
from being hoarded or exported because they are 
worth more as coin than as metal. Fractional sil- 
ver coins suffer a reduction in weight by about 
€ per cent, of the bullion value of the silver dollar. 
To illustrate, a silver dollar contains 371.25 grains 
of pure silver. Subsidiary coins contain only 345.6 
grains of pure silver for two halves, four quarters, 
or ten dimes. 

4. Coinage on Government account only. It is 
evident that if coins are issued at a nominal value, 
which is about the cost of the metal contained in 
them, the issuer — the Government — makes a profit 
or seigniorage. This profit inures to the benefit 
of the Government and not to a private person. 
This is necessary because it is the duty of the 
Government to redeem these coins under certain 
conditions. 

5. Limit in amount coined. Subsidiary coins 
are minted to the amount which experience snows 
is necessary for purposes of trade. The purpose 
of this restriction is to insure subsidiary coins from 
falling below par. If subsidiary coins were minted 
without limit, they would soon assume the same 
coin value as metal. 

[136] 



APPENDIX 

C. Limited legal tender. The purpose of this 
provision is to prevent a debtor from making large 
payments in overvalued subsidiary coins to a 
creditor. It is also intended to prevent subsidiary 
coins from displacing standard money and becom- 
ing itself a standard money. Fractional silver 
coins are legal tender up to $10; minor coins are 
legal tender up to 25 cents. 

7. Redeemability. It is necessary for the Gov- 
ernment to redeem subsidiary coins ill order to 
keep them on a par with standard money, and thus 
protect types of business which derive their income 
in large numbers of small coins, such as the street 
railway and telephone companies. 



APPENDIX III 

Portraits of Various Kinds of Uxited States 
Paper Money 

On the following page is shown a chart of the 
engraved portraits on various kinds of United 
States paper money, by denominations. The dashes 
indicate that such denominations are not issued. 
The parentheses indicate that these denominations 
have several series outstanding with diiferent en- 
gravings. The engravings given are the most usual 
ones. 

[ 1«7 ] 



APPENDIX 



Jtenom- 
/natiom 


J//yer 
Cerf/f/'fd/e 


Oo/ct 
Cert/Jfcafe 


L/r?//ert 

J/a/es 

/Tote- 


feJera/ 
/feserre 
A'ote 


fcdera/ 
fleaerve 
daMAb/e 


1 

tfotionalX: 

Sank Me \ 


*/ 


l/nco/n 
Grant 


— 


Jfs////yfy 





M//ylon 





2 


ttlv/lMj/Oft 





Jr/fmoa 





Jeffmon 


; 


6 


Cfiief 





Jackson 


l/nco/n 


linco/n 


Harr/son ' 
(Garf/eld) 


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T.A. • 
f/encfr/cfa 


M/c/taet 

/////eyas 


C/acA 


Jaefoco 


Jackson 


Mk/a/e/ 


20 


J)an/e/ 


tifaftkgk} 


Hamilton 


Clew/am 


flew/j/74 


/tag/? i 
Mti//to/r 


SO 


fJward 
Everett 


Grant 


frank///) 

(toy). 


Grant 


Grant 


Jo/w 
Sherman 


/oo 


Monroe 


£enton 


l/ncoln 


frank/in 


frank///) 


Jo/w Jay 

fi/ox 


600 


Jnn/ner 


l/nco/n 


J.ff.Mm-. 
pew 


Jo/in 

Mdrj/tf// 


John 
Marshall 


. 


/ooo 


A/arcy 


//a/n/7/on 


MV/tt 
{////ton 


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f/ami/ton 




5000 





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A/M/JM 


Afarf/SO/) 







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Jackjoa 


Jackson 










[188] 



INDEX 

Page 

Alterations 4 6? 63 

Automatic cashier 52 

Automatic coin counting and wrapping machine 97 

Automatic door closing devices 37 

Bureau of Engraving and Printing 70, 94. 99 

Burglar-alarm 37 

Burglar-alarm company 37 

Cages 28, 35, 73 

Cash 38 

Safeguarding paving tellers' 33 

"Cash" or "Bearer" checks 51 

Cash proof 53 

Cash requirements 24 

Cash reserves * 18, 24 

Cashing checks 39 

Points to observe in 40 

Risks involved in 40. .57 

Cashing expense slips 5 2 

Central Reserve cities 25 

Certifications 65 

Business of 67 

Reasons for 68 

Certified checks 6G 

Definition 66 

Stop-pavment on 129 

Chart- 
Organization, of paying functions 23 

Showing engraved portraits on various kinds of 

United States paper money 138 

Showing various kinds of United States money. . 91 

Check-protecting devices 46, 64 

Checks — 

Altered 46, 130 

Cashing 39 

[139] 



INDEX 

Page 

Certified 66, 127 

Definition of 40 

Essential elements of 41 

Forged 63, 131 

Non-essential elements of 42 

Other banks' 50 

Payable to bearer 51 

Payable to cash 51 

Payable to currency 51 

Payable to self 51 

Postdated 44, 133 

Stale 44 

Stopped 48, 58, 133 

Chief clerk Ill, 118 

Clearing house balances, settling 115 

Coins — 

Fractional 135 

Gold 75 

Minor ? 81 

Orders 109 

Shipments 108 

Subsidiary 81, 135 

Collusion . . .* 99 

Counterfeiting 98 

Technical processes of 98 

Counterfeits 98 

Detection of 98 

Risk of accepting 57 

Counting money 105 

Coupons 59 

Court decisions (Appendix I) 127 

Credit instruments, extent of use of 14- 

Currency — ■ 

Kinds of 76 

Designs 1°2 

Shipments 108 

Insurance of 114 

Ptecord of 114 

Witnessing of 114 

[110] 



INDEX 

Page 

Date ^ 44 

Defalcations 29, 33 

Denominational portraits 102, 103, 138 

Denominations — 

Of coins 97 

Of paper money 96, 103 

Depositaries 26 

Electric signal system ^ 37 

Emergency alarms 37 

Endorsement 50 

Essential elements of a check 41 

Exchange of money. 94 

Expense slips, cashing 52 

Federal Reserve banks 70, 86, 88, 94, 97 

Federal Reserve bank notes 87 

Federal Reserve notes 83, 85 • 

Federal Reserve system, reserve requirements of 

members of 25 

Filling 45 

Financial responsibility 49 

Five per cent, redemption fund ^>6, 88, 90 

Forged checks 63, 131 

Forgeries 63 

Gold bars 109 

Orders 109 

Gold certificates .82, 86 

Gold coins 78 

Gold Standard Act 80, 84 

Greenbacks 84 

Identification 43 

Issue of money 70 

Joint control 39 

[141] 



INDEX 

Page 

Legal tender, definition of 77 

"Legal tenders" 84 

Limit of tolerance 78, 79 

Matured coupons 52 

Member banks 25 

Minor coins 81 

Money — 

Charts showing various kinds of 91 

Counter, work of 75 

Denominations of 96 

Excess supplies of 69 

Good — various 74 

Held 74 

Kinds of 76, 91 

Mutilated 92 

Redemption of 94 

New 70, 93 

Odd — various 74 

Old 69 

Paper 91, 95 

Redemption of 94 

Sources of supply of 69 

Unfit for circulation 93 

Usable 92 

Verification of count of 104 

Worn 92 

Money department ?2 

Cage 73 

Functions ?2 

Proof V 106 

National bank notes 70, 89 

New York Clearing House Association 14 

Non-essential elements of a check. 42 

Organization chart of paying functions. 23 

Other banks' checks 50 

Overs and shorts 108 

[142] 



INDEX 

Page 
Paper money — 

Denominational Portraits on 138 

Kinds of 76, 82 

Service life of 93 

Paying teller — 

Bonding of 34 

Cages of 28, 3,5 

Cash proof of 53 

Custodian of till money 18 

Dirties of IS 

Proof of, to general bookkeeper 184 

Qualifications of a good 15 

Reports of 122 

Risks of 40, 57 

Training of 1? 

Pavroll 116 

Clerk 116 

Divisions of 116 

Records 117 

Petty cashier 121 

Proof to general bookkeeper 124 

Protective apparatus 36 

Qualifications of a good paying teller 15 

Raised bills 101 

Methods of detecting 102 

Methods of making 101 

Raised checks (see checks altered) 46, 130 

Receiving teller 21 

Redemption of money 94 

Reserve cities 25 

Reserves — 

Of member banks 25 

Of state banks 26 

Of trust companies 27 

[143] 



INDEX 

Page 

Safeguarding cash 33 

Service life of paper money 93 

Settling clearing house balances 115 

Signature 47 

Silver certificates 83 

Silver dollars 80 

Sources of money supply 69 

Standard silver dollars 80 

State banks, reserve requirements of 26 

Stop-payment orders 48, 58 

Acknowledgement of 62 

Acknowledgement of cancellation of 62 

May be telegraphic 59 

On duplicate checks 61 

Reasons for . , . 59 

Subsidiary silver coins . .81, 135 

Sub-treasuries 70, 94 

Till money 18, 19, 38, 106 

Time lock 37, 39 

Treasury Department 85, .92 

Treasury notes of 1890 85 

Undated check 45 

United States Assay Offices 71, 109 

United States notes 84 

United States Secret Service Department. 101 

United States Treasury 71, 79, 81, 84, 86, 90 

Unit paying-receiving system 30 

Advantages of 30 

Ideal 32 

Ob j ections to 32 

Vault 20, 37, 3D 

What a paying teller should know about the various 

kinds of United States money 76 

[ 144] 




00273315494 



